Group including Apple signs Letter of Intent to purchase Toshiba's memory chip business
Toshiba has put its memory chip business up for sale as a result of huge losses racked up by its U.S. nuclear unit, Westinghouse Electric. That company filed for bankruptcy earlier this year. As a result of Westinghouse's problems, Toshiba needs to raise a massive amount of money, which it will do by selling the profitable memory chip business. Without raising the necessary funds, Toshiba's stockholder equity would be in the red and the company's stock could be de-listed from the Tokyo Stock Exchange as soon as next March.
Bain and Apple plan on taking the memory chip business private with its purchase, and then selling it to the public in Japan at a future date. For Apple, the purchase could allow it to supply itself with enough flash memory chips for its own devices. While currently Apple relies on Samsung for the vast majority of its memory chips, Apple likes to have more than one source of a component just in case it can't get enough of the part. In addition, it likes to play two suppliers against each other when it comes to pricing. By supplying itself with NAND flash memory chips, Apple can slowly wean itself off its dependence on Samsung for this part. We should know by the end of this month whether Apple will be able to claim a percentage of Toshiba's memory chip business as its own.