Toshiba negotiates sale of its NAND arm to Bain Capital-led group

Toshiba has announced that it's entering negotiations with a bidding group led by American investment capital company Bain Capital to purchase its silicon manufacturing business over objections from manufacturing partner Western Digital. Bain's group also includes South Korean chip manufacturer SK Hynix and a pair of investment groups backed by the Japanese government. The group's offer is reportedly worth ¥2.4 trillion (about $22 billion), including ¥200 billion ($1.8 billion) earmarked for infrastructure. Toshiba had previously chosen a Bain-led group of investors in June before lawsuits from WD apparently spoiled the deal.

Toshiba is selling its profitable NAND-making arm after sustaining enormous losses in its American nuclear power business. The company is currently the second-largest manufacturer of NAND flash silicon used in PC SSDs and smartphones, just behind Korean rival Samsung. WD and Toshiba are manufacturing partners with a joint venture in NAND flash chip development and production. WD isn't happy with this development, as it believes that a potential sale of Toshiba's chip making operations to a competitor may violate terms of the its joint venture with the Japanese company.

Bain's current investment group includes SK Hynix, the world's second largest DRAM maker, as well as the Innovation Network Corp of Japan and the Development Bank of Japan, a pair of investment groups controlled by the Japanese government. There's a third investment group interested in Toshiba's NAND business that's led by Taiwanese electronics manufacturer Hon Hai Precision Industry Co, better known as Foxconn.

Toshiba is eager to close a deal before the end of March. If a deal cannot be reached, the company may be forced to report a negative net worth for a second consecutive year, a scenario that could result in the company being de-listed from the Tokyo Stock Exchange. Some outlets reported yesterday that Toshiba and WD reached an agreement to sell the silicon manufacturing business to the American storage technology company. Those reports appear to have been premature, given the current Memorandum of Understanding between Toshiba and Bain's group.

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    • Flying Fox
    • 2 years ago

    Not too sure if I want to see a scenario where [url=https://techreport.com/news/32487/report-apple-joins-bain-capital-bid-for-toshiba-nand-business<]a single device manufacturer[/url<] could potentially have access to hog a huge chunk of world wide flash output (not that they are not doing that right now). But I guess this group has put forward the most money on the table, simple as that.

    • Chrispy_
    • 2 years ago

    Why, exactly, is nuclear so bad in the US right now? Is this all because of Trump bringing back the coal industry or something?

    Thanks, Trump!

      • blastdoor
      • 2 years ago

      Not sure if you’re being ironic/sarcastic, but the problems of the nuclear industry in the US existed long before Trump came along.

      It turns out that power plants whose original primary purpose was to provide the raw materials for nuclear bombs (with electricity as a nice extra bonus) have high costs in terms of safety and security.

      When you no longer want to make a ton of bombs and just want electricity, nuclear (at least as it has been historically implemented) isn’t cost-effective.

        • ermo
        • 2 years ago

        How’s that Thorium thing doing these days?

          • blastdoor
          • 2 years ago

          [url<]https://www.extremetech.com/extreme/254692-new-molten-salt-thorium-reactor-first-time-decades[/url<]

        • Aether
        • 2 years ago

        Nuclear power plants have never been used to make materials for bombs. That has always been done at federal facilities. The uranium at power plants is only ~4% enriched and stays in the fuel pins the entire time it is at the plant.

        The nuclear industry’s problems are upfront cost and crazy cheap natural gas, with perception playing a role after Fukushima. Toshiba’s problem specifically was being able to properly bid the cost of building a huge complicated plant when very few have been built for a few decades in a *very* heavily regulated industry. (Many would argue over-regulated.)

          • James296
          • 2 years ago

          …..chernobyl

            • Aether
            • 2 years ago

            I was assuming that we were strictly talking about American plants since the original question was, “Why, exactly, is nuclear so bad in the US right now”.

            • VincentHanna
            • 2 years ago

            3 mile Island…

            • Chrispy_
            • 2 years ago

            Chernobyl vs Air pollution and global warming?

            I’ll take Chernobyl, thanks. It’s definitely the lesser of two evils in terms of loss of life.

            [url<]https://unearthed.greenpeace.org/2017/03/06/air-pollution-cause-40000-deaths-every-year-fact-check-linked/[/url<]

          • blastdoor
          • 2 years ago

          Ok, I was a little off. Reprocessing of nuclear waste from power plants is a way to make fuel for nuclear weapons, but it’s not actually how the US made bombs.

          However, the uranium used for nuclear power plants is a step along the way to being useful for nuclear weapons. That’s one reason why nuclear power plants need a lot security.

          And it’s a big reason why nuclear power plants use the fuel cycle they do — because it has a nice synergy with a nuclear weapons program. The same infrastructure for enriching uranium can support both activities.

          I’m sure the North Koreans and Iranians would love it if everyone were so naive as to believe that nuclear power has absolutely nothing to do with a nuclear weapons program.

            • Aether
            • 2 years ago

            US plants use low-enriched uranium because light water reactors can’t be made critical with unenriched uranium, and the US uses light water reactor because that was what was developed by the US navy due to General Rickover. The only plants in the world that use unenriched uranium are the CANDU reactors in Canada, which need heavy water to be critical.

            Also, if you reprocess used nuclear fuel (which the US has not done since PUREX was shut down), you are not enriching uranium; you are extracting plutonium.

            You are correct that the same infrastructure can be used for both fuel and weapons, but you need many more stages for HEU. That is why the US govt keeps a close eye on equipment that can be used in centrifuges or gaseous diffusion plants.

      • trackerben
      • 2 years ago

      It’s the renewable-energy industrialists who have campaigned for decades against further investment, exploiting the fears of the ignorant public to turn them against “dangerous nuclear energy”.

      Note that the President has nothing to do with the huge surge in Asian investment over the past two decades.

      [url<]https://www.wired.com/2007/11/co-founder-of-greenpeace-envisions-a-nuclear-future/[/url<] [url<]http://www.washingtonpost.com/wp-dyn/content/article/2006/04/14/AR2006041401209.html[/url<] [i<]...That's not to say that there aren't real problems -- as well as various myths -- associated with nuclear energy...[/i<] [url<]https://www.theguardian.com/commentisfree/2011/apr/05/anti-nuclear-lobby-misled-world[/url<] [i<]...The anti-nuclear movement to which I once belonged has misled the world about the impacts of radiation on human health. The claims we have made are ungrounded in science, unsupportable when challenged, and wildly wrong. We have done other people, and ourselves, a terrible disservice...[/i<] [url<]http://www.world-nuclear.org/information-library/country-profiles/others/asias-nuclear-energy-growth.aspx[/url<] [i<]...In contrast with North America and most of Western Europe where growth in electricity generating capacity and particularly nuclear power levelled out for many years, a number of countries in East and South Asia are planning and building new nuclear power reactors to meet their increasing demands for electricity...[/i<]

        • NovusBogus
        • 2 years ago

        [quote<]It's the renewable-energy industrialists who have campaigned for decades against further investment, exploiting the fears of the ignorant public to turn them against "dangerous nuclear energy". [/quote<] Basically this, plus hardcore enviromaoists hate anything that looks like a practical solution to the various horribles they're always going on about. They're all about the power, not the horribles, so actually resolving them would defeat the purpose. Nuclear has been hated on for my entire life, which is unfortunate given that it's the solution to all problems foreign and domestic. My understanding of this eternal truth might have something to do with being born and raised in close proximity to the High Temple Of The Glorious Atom, known commonly as Oak Ridge. 🙂

          • trackerben
          • 2 years ago

          Most graphs of domestic growth correlate with energy availability. This also shows a sector that’s rife for disruption, with huge and stable profits streams that can be captured to jump up disadvantaged sources like solar and wind.

          Crony-capitalist projects were the action during the previous Administration. Social media and P2P cartels got regulatory support to box in their carrier rivals. Renewable-energy investors lobbied for subsidy and regulatory regimes that boost their prospects against the known-good producers.

          To these industrialists, it’s about maximizing political power. But with modern high-energy civilization, maximal economic generation is the key measure. Government has to get the balance right in terms of financing and incentives. Past Administrations were too easily swayed by interests, making it harder to determine objective policies.

        • psuedonymous
        • 2 years ago

        Utter nonsense. The curtailing of investment in Nuclear power occurred long, long before wind or solar were even remotely viable. The problem is twofold: public backlash making it politically unviable to agree to a plant being built in your locale, and extreme lobbying power from the petrochemical industry. The former slowed and effectively stopped the rollout of new plants, and the latter piled on as many regulations as possible to make new plants effectively impossible without massive upfront government scale funding (with the former than preventing that funding being offered).

        The ‘renewable energy industrialists’ have the lobbying power of a gnats fart in a thunderstorm.

      • davidbowser
      • 2 years ago

      Based on reading (admittedly several years ago) about this, it is a combination of pressure from both the anti-nuclear environmental folks as well as the political/business pressure from the coal/oil/gas industry that led to the flatline/shrinking of the nuclear power footprint in the US.

      Personal observation – I was always amazed at people that would get agitated about burying nuclear waste in Yucca Mountain, but seemingly less concerned about the (hundred or so) mile wide scars in the surface of the earth left from coal mining and shale oil extraction. Environment folks tend to get bent about both, but seem to have no reasonable transition plan to get from today to the solar/wind future, and the coal/oil/gas folks only seem to care about their jobs (at the low level) and making gobs of cash (at the high level).

      One press reference that calls out environmental activists and “cheap natural gas”:

      [url<]http://www.timesfreepress.com/news/business/aroundregion/story/2016/feb/13/tvabandons-new-reactor-design-bellefonte/349984/[/url<]

      • Beahmont
      • 2 years ago

      Nah, the problem with Nuclear is that the up front costs and liabilities are astronomical and the profits are more or less the same as with other kinds of energy generation.

      Why spend 10 Billion on one Nuclear plant, when you can spend 3 billion on 3 Natural Gas plants that have the same capacity, less liability, and more or less the same profit potential?

      • K-L-Waster
      • 2 years ago

      Seems to me that nuclear has never really had a good rep in the US since the 70s. Ever since the accident at 3 Mile Island really.

      • Mr Bill
      • 2 years ago

      The respository was found to be adaquate but DOE failed to meet all conditions for the repository with respect to land ownership and water rights. So, it can’t go forward. Read about it [url=https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1949/<]here[/url<].[quote<]The NRC staff has found that DOE has met the applicable regulatory requirements, subject to the proposed conditions of construction authorization identified in Table 2.5-1 in SER Volume 1 (General information), Volume 2 (repository safety before permanent closure), Volume 3 (repository safety after permanent closure); Volume 4 (administrative and programmatic requirements), and Volume 5 (with respect to probable subjects of license specifications), except for the requirements in 10 CFR 63.121(a) and 10 CFR 63.121(d)(1) regarding ownership of land and water rights, respectively. The NRC staff is not recommending issuance of a construction authorization at this time because the NRC staff determined that DOE has not met these regulatory requirements regarding ownership and control of the land where the GROA would be located and certain water rights. In addition, a supplement to DOE's environmental impact statement has not yet been completed.[/quote<]

      • MOSFET
      • 2 years ago

      [url=https://www.usnews.com/news/best-states/south-carolina/articles/2017-07-27/officials-consider-settlement-over-2-nuclear-reactors<]Toshiba Corp. has agreed to pay South Carolina utilities $2.2 billion for two troubled nuclear reactors regardless of whether they're ever completed...[/url<] [url=http://money.cnn.com/2017/06/10/news/companies/toshiba-nuclear-plant-georgia-southern-co/index.html<]Toshiba's bankrupt nuclear unit left an uncertain future for two half-finished nuclear reactors in Georgia -- but the company promised Saturday it will pour up to $3.68 billion into the project to finish it.[/url<] There's always the other side of the story: the contractors haven't done this in 40 years, so they are so very inefficient at it. I don't buy this side whatsoever.

      • Kougar
      • 2 years ago

      In addition to Aether’s points, people have actively blocked any proposed plants that would’ve been built nearby. Nobody wants them around, but they are fine with a near coal, coke, or gas plant instead.

      There are two reactors at the South Texas Nuclear Generating Station and proposals to expand capacity to four reactors have been around for almost a decade, but in the wake of Fukushima strong opposition has formed to block even expanding the plant.

      Multiple Texas power companies that were invested in it have backed out of the project and/or written off investments made in the expansion, and last I heard the expansion is still on indefinite hiatus despite already having federal licenses and regulatory approval.

    • blastdoor
    • 2 years ago

    Correct me if I’m wrong, but aren’t both WD and Bain American?

    So Toshiba loses a ton of money because it bought the American company Westinghouse and has to sell off its best assets to American investors?

    The 1980s American paranoia about Japan taking over the world sure does seem silly in hindsight.

      • shaq_mobile
      • 2 years ago

      I’m more worried about Californians taking over Oregon.

    • chuckula
    • 2 years ago

    This looks like a death spiral for Toshiba. The NAND market is extremely hot right now and the supply/demand dynamic allows companies like Samsung to inflate their net worth just by producing NAND. If Toshiba had real hopes for the future they wouldn’t be selling off operations in a highly profitable area just to keep the books looking good for another quarter.

      • NTMBK
      • 2 years ago

      They already flogged their profitable medical business to Canon.

      • just brew it!
      • 2 years ago

      I think this has gone beyond “making the books look good” at this point. The Westinghouse debacle is an existential threat, and they are struggling to survive.

      • mistme
      • 2 years ago

      This isn’t “death spiral when there are other options” and it’s not about hopes for the future, they don’t have other valuable things to sell to pay for mistakes, simple as that.

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