Apple & Bain complete $18B acquisition of Toshiba memory chip unit

Posted:
in iPhone edited June 2018
The purchase of beleaguered Toshiba's memory group, long in limbo, is now complete, with Apple joining Bain, Dell, Seagate, and others to seal the deal.

Toshiba NAND flash chips


The deal's completion, reported by Reuters, puts a manufacturer of NAND flash memory used in Apple devices in new hands. The consortium, led by Bain Capital, also includes SK Hynix, Dell Technologies, Seagate Technology and Kingston Technology; Toshiba will retain 40 percent of the unit.

The Chinese government approved the deal last month, clearing the final major hurdle.

Toshiba sold the unit in order to stave off crisis following the failure of its Westinghouse subsidiary; other bidders included longtime Apple partner Foxconn as well as Western Digital. At one point in mid-2017, Apple and Dell were part of a consortium with Foxconn in a bid for the business, but that group lost out to Bain.

It's not known how much Apple has invested, although reports last fall put the figure at as high as $3 billion.

The purchase will give Apple readier access to NAND chips, while also continuing to diversify its supply chain, as it has already been doing with both cameras and screens for its 2018 iPhone line.
watto_cobra

Comments

  • Reply 1 of 17
    SpamSandwichSpamSandwich Posts: 31,493member
    I dunno... if Apple sees owning part of a memory chip manufacturer as a beneficial arrangement, why the hell are they not buying large stakes, if not controlling stakes, in CPU companies?
    edited June 2018
  • Reply 2 of 17
    fox.kenjifox.kenji Posts: 12member
    “The Chinese government approved the deal last month, clearing the final major hurdle. “

    What business is it of the Chinese to have a say of someone else’s acquisitions? They don’t own Toshiba, that’s a Japanese company. They don’t own Dell, Apple, Western Digital, nor the oher company mentioned (Korean owned), etc.

    It should be enough if the Japanese, American, and Korean governments approve of the sale/acquisition.

    Future-ProofAvieshekrandominternetpersonjony0watto_cobra
  • Reply 3 of 17
    wonkothesanewonkothesane Posts: 1,404member
    Somehow funny, how a company selling some of the most wanted components can enter such troubles. 
  • Reply 4 of 17
    SpamSandwichSpamSandwich Posts: 31,493member
    fox.kenji said:
    “The Chinese government approved the deal last month, clearing the final major hurdle. “

    What business is it of the Chinese to have a say of someone else’s acquisitions? They don’t own Toshiba, that’s a Japanese company. They don’t own Dell, Apple, Western Digital, nor the oher company mentioned (Korean owned), etc.

    It should be enough if the Japanese, American, and Korean governments approve of the sale/acquisition.

    I believe it’s because Toshiba had to sell part or all of the company and China or a Chinese group bought it. 

    Related?: https://www.eetimes.com/document.asp?doc_id=1322434
  • Reply 5 of 17
    ronnronn Posts: 336member
    fox.kenji said:
    “The Chinese government approved the deal last month, clearing the final major hurdle. “

    What business is it of the Chinese to have a say of someone else’s acquisitions? They don’t own Toshiba, that’s a Japanese company. They don’t own Dell, Apple, Western Digital, nor the oher company mentioned (Korean owned), etc.

    It should be enough if the Japanese, American, and Korean governments approve of the sale/acquisition.

    Just like the governments in Japan, the U.S. and South Korea, the Chinese regulators had to approve the sale to make sure competition isn't stifled, and that the sale isn't against national interests. Toshiba could always pull out of China, but I don't think they'd be that dense.
    GeorgeBMac
  • Reply 6 of 17
    SpamSandwichSpamSandwich Posts: 31,493member
    Incidentally, AAPL just hit an all-time intraday high of $190.12.
    bshankwatto_cobra
  • Reply 7 of 17
    Incidentally, AAPL just hit an all-time intraday high of $190.12.
    The all-time high was hit on 10 May (intraday high $190.37).
    ronndamn_its_hot
  • Reply 8 of 17
    fox.kenji said:
    “The Chinese government approved the deal last month, clearing the final major hurdle. “

    What business is it of the Chinese to have a say of someone else’s acquisitions? They don’t own Toshiba, that’s a Japanese company. They don’t own Dell, Apple, Western Digital, nor the oher company mentioned (Korean owned), etc.

    It should be enough if the Japanese, American, and Korean governments approve of the sale/acquisition.

    Toshiba is Japanese not Chinese
    Avieshekanton zuykov
  • Reply 9 of 17
    SpamSandwichSpamSandwich Posts: 31,493member
    Incidentally, AAPL just hit an all-time intraday high of $190.12.
    The all-time high was hit on 10 May (intraday high $190.37).
    Yep, you're right.
  • Reply 10 of 17
    anton zuykovanton zuykov Posts: 1,040member
    I dunno... if Apple sees owning part of a memory chip manufacturer as a beneficial arrangement, why the hell are they not buying large stakes, if not controlling stakes, in CPU companies?
    more unnecessary risks? They are not in the business of investing?
     I think the reason they are part of that deal is to make sure, they get what they want from that manufacturer. The fact that they own part of that business is probably inconsequential to them in and of itself ....and is much less important, comparing to what they now can do with that business, for THEIR OWN "device creating business" benefit.
    edited June 2018 Rayz2016GeorgeBMac
  • Reply 11 of 17
    gatorguygatorguy Posts: 21,257member
    I dunno... if Apple sees owning part of a memory chip manufacturer as a beneficial arrangement, why the hell are they not buying large stakes, if not controlling stakes, in CPU companies?
    more unnecessary risks? They are not in the business of investing?
     I think the reason they are part of that deal is to make sure, they get what they want from that manufacturer. The fact that they own part of that business is probably inconsequential to them in and of itself ....and is much less important, comparing to what they now can do with that business, for THEIR OWN "device creating business" benefit.
    Probably surprising to some Apple is not part of management and not involved in determining the direction of the business. The company will be jointly run by Toshiba and Bain.
  • Reply 12 of 17
    This makes for a great investment for Apple as I believe NAND chip costs are rising as I believe Apple now can control better distribution, availability, but most importantly better margin on their products. Controlling NAND chips allows Apple this flexibility. 
    watto_cobra
  • Reply 13 of 17
    GeorgeBMacGeorgeBMac Posts: 5,263member
    Bain has a practice of running companies into the ground under the guise of "saving" them.  It does that by buying the company using borrowed funds and then saddling the company with that debt -- which, for most, becomes insurmountable...  So, they then declare bankruptcy sticking others with the loss and walk away with the profits.

    In the case of this unit, it must be remembered that the memory unit didn't need to be saved.  Toshiba had to sacrifice it to rescue itself from its investment in (red face here!) America's Westinghouse...

    Hopefully the partners in this deal will keep Bain from destroying a great organization.
    ronnwatto_cobra
  • Reply 14 of 17
    anton zuykovanton zuykov Posts: 1,040member
    gatorguy said:
    I dunno... if Apple sees owning part of a memory chip manufacturer as a beneficial arrangement, why the hell are they not buying large stakes, if not controlling stakes, in CPU companies?
    more unnecessary risks? They are not in the business of investing?
     I think the reason they are part of that deal is to make sure, they get what they want from that manufacturer. The fact that they own part of that business is probably inconsequential to them in and of itself ....and is much less important, comparing to what they now can do with that business, for THEIR OWN "device creating business" benefit.
    Probably surprising to some Apple is not part of management and not involved in determining the direction of the business. The company will be jointly run by Toshiba and Bain.
    And Bain Capital is an investment firm, correct? I am pretty sure, Apple ensured in the deal everything it needed to secure and ensure.
    No formal position is required, in this case. In fact, it is probably better this way, as it creates less information noise... 
    Apple targets the results. So, if that gives them enough control and ensures every other party is happy and the result is where Apple wants it to be -- that is the strategy Apple would choose.
    Basically, "increasing upside, and decreasing the downside" type of stuff.
    As always, that is just my opinion, of course. 
    edited June 2018
  • Reply 15 of 17
    nunzynunzy Posts: 662member
    gatorguy said:
    I dunno... if Apple sees owning part of a memory chip manufacturer as a beneficial arrangement, why the hell are they not buying large stakes, if not controlling stakes, in CPU companies?
    more unnecessary risks? They are not in the business of investing?
     I think the reason they are part of that deal is to make sure, they get what they want from that manufacturer. The fact that they own part of that business is probably inconsequential to them in and of itself ....and is much less important, comparing to what they now can do with that business, for THEIR OWN "device creating business" benefit.
    Probably surprising to some Apple is not part of management and not involved in determining the direction of the business. The company will be jointly run by Toshiba and Bain.
    Apple can trust Bain to make big profits.
  • Reply 16 of 17
    seanjseanj Posts: 74member
    This makes sense for Apple. Ordinarily they wouldn't be interested but they want to ensure a healthy memory market. Had this unit ended up shutting down then prices would have gone up, forcing Apple to either absorb the increase or to pass it on to its customers. They were simply ensuring the survival of a supplier and have picked up a say in its running as a bonus.
    watto_cobra
  • Reply 17 of 17
    ronnronn Posts: 336member
    Incidentally, AAPL just hit an all-time intraday high of $190.12.
    I believe $190.24 is the new all-time closing high. Let's see how the market throws cold water on AAPL on Monday.
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