Hon Hai Precision Industry Co (鴻海), the world’s largest contract electronics maker, is likely to join forces with South Korean memorychip maker SK Hynix Inc to bid for the semiconductor assets of Japan’s Toshiba Corp, according to a report in the Korea Herald.
In a report posted on the newspaper’s Web site on Sunday, industry sources in South Korea were cited as saying that SK Hynix needs extra funding to acquire Toshiba’s memorychip business — Toshiba Memory — and Hon Hai is expected to serve as a financial backer for the potential South Korean suitor.
Previously, Toshiba had planned to dispose of a 19.9 percent stake in Toshiba Memory, but Japanese media have said that the firm could sell all of its memorychip assets to offset the impact of heavy losses caused by its nuclear power business in the US.
The Korea Herald report said that the acquisition of a 100 percent stake in Toshiba Memory could cost about US$8.7 billion, but SK Hynix is only sitting on about US$3.4 billion in cash and cash equivalents, so Hon Hai is likely to extend a helping hand to the South Korean firm.
The report said that Hon Hai chairman Terry Gou (郭台銘) has close business ties with SK Group chairman Chey Tae-won. Hon Hai holds about a 3.5 percent stake in SK Group and is the company’s fourth-largest shareholder.
SK C&C, SK Group’s information technology services provider, set up a joint venture — FSK L&S — with Hon Hai’s logistics management subsidiary JUSDA in November last year to provide logistics services for a wide range of businesses involved in the Internet of Things, artificial intelligence and big data.
In September 2015, Chey visited Taiwan to meet with Gou and they exchanged views on market conditions in countries including China and India.
The Korea Herald report cited Korea Investment and Securities analyst Yoo Jong-woo as saying that by working with Hon Hai, SK Hynix could reduce its financial burden, while the cooperation could also lower the possibility that the Japanese government would block the bid.
Last week, Gou said that Hon Hai is very sincere in its wish to bid for Toshiba’s memorychip assets and has faith it could help the company grow.
However, a Japanese financial news Web site said on Saturday that some officials at the Japanese Ministry of Economy, Trade and Industry had voiced opposition to a bid by Hon Hai.
The sources said that Hon Hai has a broad production base in China and if the Taiwanese firm produces Toshiba’s flash memory there it could result in the firm’s technology being stolen.
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