Silver Lake and Broadcom eye $18bn Toshiba chip unit

Silver Lake, the tech-focused private equity group, has teamed up with US chipmaker Broadcom in an effort to acquire Toshiba’s semiconductor business for nearly $18bn, people briefed about the situation said.

The Japanese company is in talks with several other potential suitors for its chipmaking unit, these people said, as it hopes that the sale will help it meet any financial shortfalls related to this week’s bankruptcy filing for its US nuclear business Westinghouse.

Toshiba’s decision to sell its semiconductor business comes after its shareholders this week approved a plan to split the unit from the rest of the business, said those briefed about the process of the sale.

Nikkei, the Japanese news organisation which first reported Silver Lake and Broadcom’s joint bid for Toshiba’s chip business, said that a decision on the sale would be made before a shareholder meeting in June.

Reuters later reported that other potential bidders include Western Digital, a US data storage company, Micron Technology, South Korean chipmaker SK Hynix and an unidentified group of financial investors.

The semiconductor industry has undergone a wave of consolidation in the past few years, with large players combining in an effort to cut costs and boost margins.

In recent years Qualcomm acquired NXP for $47bn, Broadcom merged with Avago in a $37bn deal and Intel took over Mobileye for $15bn and Altera for nearly $17bn.

Toshiba is known for memory chips based on a technology called NAND flash, which was invented at the Japanese conglomerate 30 years ago and has become an essential component in digital gadgets like cameras and smartphones. Its share of the market has fallen from 34 per cent to 18 per cent since the start of the decade, according to research firm Statista, although it has held on to its position as the second-biggest producer, after Samsung.

Silver Lake and Broadcom declined to comment. Toshiba could not be immediately reached.

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