Foxconn says Apple, Dell join its bid for Toshiba chip business

[TAIPEI] Apple Inc and computing giant Dell Inc will join a Foxconn-led consortium bidding for Toshiba Corp's highly prized chip unit, the CEO of the world's largest contract electronics manufacturer told Reuters on Monday.

Terry Gou, Foxconn's founder and chief executive, said US-based Kingston Technology Co, a maker of memory products, would also be part of the bidding group, while Amazon.com Inc was close to joining.

The Taiwanese firm is also in discussions with Alphabet Inc's Google, Microsoft Corp and Cisco Systems Inc about their participation in the bid, he said.

He declined to comment on the total size of the offer or say how much Apple and other US firms planned to invest.

"I can tell you Apple is in for sure," Mr Gou said in an interview, adding that its participation had been approved by the Chief Executive Tim Cook and Apple's board of directors.

Toshiba is rushing to find a buyer for the world's second-largest producer of NAND chips, which it values at US$18 billion or more, to cover billions of dollars in cost overruns at its now-bankrupt US nuclear business Westinghouse Electric Corp.

Foxconn, however, has not been seen as a frontrunner for the unit due to its deep ties with China, where it manufactures much of its products. The Japanese government has said it will block any deal that would risk the transfer of key chip technology out of the country.

But Mr Gou said that Foxconn-led consortium contained no Chinese capital and had the advantage of not inviting as much antitrust scrutiny as other suitors. "The key is that we are all customers, we are users," he said.

Foxconn, formally known as Hon Hai Precision Industry Co, and its Japanese unit Sharp Corp would have a combined stake of not more than 40 per cent, he added.

Representatives for Apple and the other US firms named by Mr Gou could not be immediately reached for comment outside of regular business hours. Sharp declined to comment.

Mr Gou's revelations of the Foxconn-led bid come as uncertainty spikes over the make-up of the groups bidding in the hotly contest auction just days before Toshiba is due to announce a preferred bidder.

Western Digital Corp plans to raise its offer for Toshiba's semiconductor unit, a person familiar with the matter told Reuters over the weekend, in a last-ditch effort to clinch a deal.

The US chipmaker is part of a consortium led by a Japanese government-backed fund and the group will present the new offer of 2 trillion yen (S$25.1 billion) or more, the source said.

The laptops-to-nuclear conglomerate aims to name a winner for at a board meeting on June 15. Tokyo, however, has been asking Toshiba to postpone the decision as the government-led consortium has yet to finalise its proposal.

Some sources have said that the state-backed fund, the Innovation Network Corp of Japan, is also exploring a potential consortium with Bain Capital, though it is unclear what other firms would also be members of that group.

Western Digital has been seen by some sources as crucial to successful deal, as it jointly operates a key flash-memory chip plant with Toshiba in western Japan.

But Western Digital and Toshiba have been at loggerheads over the auction. Western Digital is pursuing an international arbitration claim that Toshiba has breached joint-venture contracts by entertaining outside bids.

Toshiba has favoured a separate bid from US chipmaker Broadcom Ltd, which has partnered with US private equity firm Silver Lake to offer 2.2 trillion yen, people familiar with the matter have told Reuters.

REUTERS