Apple Joins Bain in Bid for Toshiba’s Chip Business

Apple has joined a consortium of companies led by the investment firm Bain Capital in a revised [$18 billion] last-ditch offer for Toshiba's chip unit.

Toshiba is the world's second largest producer of Nand memory chips, which are used in smartphones and computers. A deal may be crucial for Apple in keeping down prices of components for its iPhone, as well as reducing its dependence on market leader Samsung.

According to reports by Reuters, Apple has been brought in to help bolster the bid, as Toshiba and drive manufacturer Western Digital struggle to strike a deal, despite the two partnering on the joint venture chip business.

"Apple is so big they need to multisource," said Frank Gillett, an analyst with market research firm Forrester. He said Apple needed to keep as many chip suppliers as possible in the market to keep prices competitive.

A successful Toshiba bid could also provide an important source of chips for Apple, reducing its dependence on Samsung, its chief rival in the smartphone market. Samsung produces some of the company's A-series processors alongside other chips for the iPhone, iPad and other devices.

Alternatively, a combined Toshiba and Western Digital business could be almost as large as Samsung's memory unit, giving it more negotiating leverage against Apple.

Toshiba has been scrambling to sell its flash memory unit to cover billions in losses at its bankrupt US nuclear business, Westinghouse. Toshiba's relationship with US-based Western Digital has been rocky throughout the auction process, to the point that other bidders were favoured first. Western Digital has also initiated legal action that threatens to derail any deal that does not have its consent.

The revised offer from Apple, Bain and others is worth 2tn yen (£14bn). Bain and South Korean chipmaker SK Hynix will be responsible for 1.1tn yen, while Apple will provide up to 400bn...

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