Apple, Amazon join Foxconn push to secure Toshiba chip business

Apple and Amazon are reportedly joining forces with Foxconn to snap up Toshiba's semiconductor unit.


Apple and Amazon are reportedly working with Foxconn to secure a slice of Toshiba's semiconductor business which is up for sale.

Hon Hai, also known as Foxconn, has offered more than two trillion yen ($18.2 billion) for the business, as reported by Nikkei over the weekend.

According to Foxconn chairman Terry Gou, this bid has received financial backing from both Amazon and Apple, although specific financial details of the deal have not been disclosed.

"Of course Apple and Amazon are offering money together, but I cannot comment on how much funds each company is putting on the table," Gou said.

It is currently unclear whether the deal on the table is based on financing as investors, or whether Amazon and Apple want to chip in in return for a percentage of Toshiba's unit or assets.

Both tech giants are key customers of Foxconn for electronics components and device parts for products including Apple's iPhone, the Amazon Kindle, and the Amazon Echo.

Sharp, acquired by Foxconn last year in a deal worth roughly $3.5 billion, is also contributing to the bid.

In March, Toshiba's US nuclear power unit Westinghouse Electric filed for bankruptcy protection as delayed nuclear power plant projects caused the unit to hemorrhage money.

By filing for Chapter 11 protection Toshiba is able to cut its losses, but with charges of roughly $9 billion -- on top of approximately $6.3 billion in losses.

The severe financial strain caused by the nuclear project forced Toshiba to sell off its NAND flash memory chip business, which provides chips suitable for smartphones and cloud computing data centers -- both of which may be of interest to Amazon and Apple.

The measures also led to Toshiba chairman Shigenori Shiga stepping down in February.

According to Reuters sources close to the deal, despite the cash on the table, Foxconn is not a favored bidder due to the firm's ties with China. The publication says that the Japanese government is concerned that should the manufacturer's bid be accepted, "key technology" will leave the country -- and so the acquisition may be stalled by government regulators.

However, Foxconn says it is "very confident" that the company can secure the sale. With Apple and Amazon potentially appearing as backers, the government may also have to reconsider its stance on the deal.

"We will definitely not undermine nor interfere with [Toshiba's existing management], we will treat them like the way we have been treating Sharp," Gou said. "We can help banks secure their Toshiba debts. We are not like private equity funds -- if they buy a business, they will resell them for a profit afterward. But we hope to manage Toshiba for life."

Broadcom, Western Digital, SK Hynix together with Bain Capital and private equity firm Kohlberg Kravis Roberts have all made offers for Toshiba's unit.

ZDNet has reached out to Apple and Amazon and will update if we hear back.