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Toshiba Memory suitors eye alliances as deadline nears

Chipmakers, chip buyers, funds contend with differing motives

TOKYO -- A week away from the March 29 deadline for tendering bids for Toshiba's memory chip business, potential buyers are seeking partners for joint offers, with rivals, customers and investment funds negotiating a web of conflicting interests.

Toshiba aims to sell a majority of the unit to be spun off next month, dubbed Toshiba Memory. With a value estimated at 1.5 trillion yen to 2 trillion yen ($13.3 billion to $17.8 billion), the business would be difficult for a single company to afford on its own.

Toshiba's development capabilities are highly regarded. The company invented NAND flash memory, for which demand has soared for use in smartphones and data centers. Yet not all of the memory unit's 10-plus suitors are after this know-how.

Rivals Western Digital and Micron Technology, both of the U.S., and South Korea's SK Hynix, are eyeing Toshiba's share of the global flash memory market, where the Japanese industrial group is the second-largest player. Buying Toshiba's memory operations would let any of these chipmakers stand shoulder to shoulder with No. 1 Samsung Electronics.

For Western Digital in particular, this offense is also a form of defense. SanDisk -- acquired by Western Digital last year -- and Toshiba have operated chip fabrication facilities in Yokkaichi, Japan, through a joint venture for more than 15 years. With more than 1 trillion yen already invested in the facilities on Western Digital's side, the company cannot afford to let another player into the venture.

With flash memory prices climbing in a tight market, personal computer and smartphone makers that buy chips, such as Hon Hai Precision Industry, are considering bids in hopes of securing a steady NAND supply.

Investment funds have set their sights on Toshiba to capitalize on this rise in memory prices. These firms would seek to recoup their outlays via a public listing or sale.

Japanese government-affiliated financial institutions, such as the Development Bank of Japan or the public-private Innovation Network Corp. of Japan, are also considering buying into the memory unit. Chinese, South Korean and Taiwanese suitors are expected to tender bids, raising concerns in Tokyo about the potential for outflows of vital technology. Toshiba has requested government support as well.

(Nikkei)

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