Toshiba Corp. (OTC: TOSYY) (OTC: TOSBF), teetering on the brink of death after an ill-fated foray into
nuclear power, has no shortage of suitors for its lucrative flash memory chip unit, the second-biggest seller of the tech used in
cellphones and many other electronics.
The auction, which one analyst said involved four competitors, could get ugly.
4 Players
Reuters reported Wednesday that
California-based Western Digital Corp (NASDAQ: WDC) was seeking to crash the auction, charging that Toshiba is violating a joint
venture between the two, who together operate a plant in Japan.
Western Digital urged that it should be given exclusive negotiating rights.
Industry leader Samsung Electronics Co Ltd (OTC: SSNLF), U.S. chipmaker Broadcom Ltd (NASDAQ: AVGO), Taiwan's Foxconn (OTC: FXCOF) and South Korea’s SK Hynix Inc (OTC: HXSCF) are among the reported suitors who have made offers.
The Benefits Of Competition
All the major NAND chip makers stand to benefit from the competition even if they aren’t involved in Toshiba’s chip business,
including Micron Technology, Inc. (NASDAQ: MU) and Intel Corporation (NASDAQ: INTC), which is ramping up production at a new plant in China, said analyst Thomas
Diffely at DA Davidson & Co. in Lake Oswego, Oregon.
“If it goes under it’s a huge benefit to Micron, Hynix, Samsung and soon-to-be Intel,” he said.
Analyst Commentary
“I think in general that that market is very strong, but at the end of the day (the chip) is a commodity,” he added. “Once you
take one supplier out of a tight supply, it is good for the makers and bad for the guys who buy them.”
He said if Hynix succeeds in buying Toshiba’s chip business, it would vault into second
place, behind Samsung.
Toshiba is ailing because of the bankruptcy filing by its U.S. nuclear unit. Westinghouse Electric Co. It needs to sell all or
part of its most lucrative asset to cover the writedown.
Toshiba reported in Tokyo on
Tuesday that “there are material events and conditions that raise the substantial doubt about the company's ability to continue as
a going concern.”
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Image Credit: By The Conmunity - Pop Culture Geek from Los Angeles, CA, USA - CES 2012 - Toshiba, CC BY 2.0, via Wikimedia Commons
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