The proposed sale of Toshiba Memory Corporation (TMC) to an investor group including Apple and Dell will act as a "shot of adrenaline" for the business, according to market intelligence firm TrendForce.
Financially troubled Toshiba began a sale process for its memory arm in April and yesterday its board agreed a JPY2tn (£13.2bn) deal with K.K. Pangea, a consortium led by Bain Capital Private Equity.
The deal, which Toshiba hopes to close by March 2018, freezes out rival bidder Western Digital, which through its SanDisk subsidiary is a joint investor in TMC's flash memory facility in Yokkaichi.
Toshiba said the board-backed proposal will "allow TMC to maintain its independence, which is important for the future growth of the memory business". The deal still needs clearance from shareholders and competition authorities. The Bain consortium also includes Apple, Dell, Kingston and Seagate, as well as other US and Japanese firms.
In response to rising demand for 3D flash memory, TMC is also proceeding with an investment in more manufacturing equipment at 'Fab 6' in Yokkaichi, Toshiba said in the statement.
Western Digital said it is seeking a permanent injunction preventing Toshiba going ahead with the investment, claiming it represents a "retaliatory breach" of the joint venture agreement between SanDisk and Toshiba.
The proposed deal will inject the necessary capital into TMC to help it begin challenging Samsung in terms of NAND flash technology and production capacity, according to DRAMeXchange, a division of market intelligence company TrendForce.
Alan Chen, senior research manager at DRAMeXchange said: "The infusion of capital from the new stakeholders in TMC will be like a shot of adrenaline. Given that the total investment in a new NAND flash fab (with a monthly capacity of 80,000~100,000 wafers) averages around $8bn, neither Toshiba nor Western Digital can alone shoulder the cost of capacity expansions and technology development, especially as they are facing against the industry leader Samsung."
The Toshiba-Western Digital alliance is playing catch-up on 3D NAND flash, DRAMeXchange added. Just 10 to 15 per cent of TMC's total monthly NAND Flash capacity was based on the 3D NAND process in Q2, compared with 40 per cent for Samsung, according to its figures.
"How Toshiba and Western Digital resolve their issues and share the production capacity of the new Fab 6 will be crucial to the completion of the deal and TMC's future development," DRAMeXchange said.
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