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timeline of Toshiba's forced memory sale
salami slicing Toshiba's SSD beauty pageant - timeline of stories
from
the fallout of nuclear and geo political tussles to final approval |
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| Toshiba's
semiconductor business rescues company |
| Editor:- January 25, 2017 - Toshiba was featured
in the mainstream news media last week due to losses by its US nuclear power
business which had been responsible for halving the value of shares in the
company.
Reports
that Toshiba's financial fix centered around selling part of its
semiconductor business to Western Digital got
a good reaction from markets. | | |
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| is Toshiba
salami slicing its memory heirloom? |
Editor:- February 14, 2017 - Toshiba has today,
again, topped mainstream media tech headlines due to the resignation of the
company's chairman. In recent weeks - were I so inclined (to fan the flames
of rumor) - I could have inserted
some
story or
other
about the sale of Toshiba's semiconductor business in this news page every
day.
Instead I came to the conclusion that the real story was that
there probably wouldn't be a single big story because the sale of the entire
memory systems business to a single buyer (most likely another memory or SSD
company) would inevitably introduce a delay due to antitrust hurdles. And
Toshiba needs financial bandaids now.
Therefore, what we've been
seeing is a fragmented approach - which on linkedin I described as "salami
slicing" the memory business heirloom. Western Digital got some - but no
one will get it all quickly due to caution about the impact of
regulator antiacid. | | |
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| Toshiba's
storage sale - update from Tom Coughlin |
Editor:- April 4, 2017 - As previously reported
Toshiba's memory
and SSD business will be spun off to generate cash to plug losses in its
nuclear generating business. A new article by Tom Coughlin,
President Coughlin Associates
-
HDD
Implications of Toshiba Memory Unit Sale - looks at the ramifications (no
pun intended) for the hard
drive market depending on which of the 10 or so potential bidders succeeds.
Among other things Tom says - "Selling the HDD unit along with
the flash unit could be one outcome... The end result could be very interesting
and create very strange bed-fellows." ...read
the article | | |
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| Sampling
the engineering temperature in Toshiba's never never land |
Editor:- April 30, 2017 - Speculation about who
might become next owner of Toshiba's
SSD and memory business continues... As I told you earlier this year I didn't
expect this to be a short story, due to monopoly and other strategic interests.
The latest chapter in this flash novella comes as the number of
buccaneers circling around the foundering wreck of Toshiba's corporate galleon
and hoping to pluck the semiconductor gold IP fabs from its belly has reduced
to 4.
A new blog -
Politics
Muddy Toshiba Bidding by Junko Yoshida
, Chief International Correspondent - EE Times - takes an engineering view
of who would be the best or worst of the bidders and asks...
"Are
Toshiba's semiconductor engineers angry? Are they discouraged?" ...read
the article | | |
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| Toshiba's
memory business sale - tensions in the timing
|
Editor:- May 15, 2017 - progress updates about
the sale of Toshiba's
SSD and memory business have been part of the underlying news fabric during
the first half of 2017. Tensions in the timing and conclusion of a prospective
sales come from various causes:-
- Toshiba needs the promise of a buyer as soon as possible to avert further
downgrading of the parent company due to losses in other markets.
An
additional urgency is that the memory market was in a
boom at the start of
the spin-off process - with prices for memory rising.
If the market
changes back to oversupply or if other factors reduce the premium value
placed on raw flash - before an acquisition is agreed - then the value of the
business will be less.
Delay therefore works to the advantage
of a buyer and to the disadvantage of the seller.
- The size and strategic nature of the transaction means that
geo-political
considerations and anti-trust hurdles will play big part in the decision
process.
If the potential buyer triggers a monopoly investigation in
their own operating markets then delay in the acquisition is inevitable and
could take upto a year.
- A complicating factor is that Toshiba shares considerable flash wafer fab
assets and IP with Western Digital which were part of arrangements evolved in
partnership with SanDisk -which WDC acquired in 2015.
In the current
situation where Toshiba's memory business is for sale - there could be
significant differences in self interest between WDC and any future owner of
the Toshiba memory, SSD and HDD business. In that context these
reports about WDC's growing unease can be more easily appreciated:-
- Nikkei
Asian Review (April 21) - "Western Digital remains opposed to any sale
of Toshiba's memory unit to a third party."
- FT
(May 15) - "Western Digital is taking its row with Toshiba to the
International Court of Arbitration, as the US storage technology group tries to
prevent what it claims is a breach of the terms of its joint venture with the
embattled Japanese conglomerate."
Editor's comments:- It's
clear that in the matter of who buys Toshiba's memory, SSD and HDD business
the strategic and business self interests of WDC and Toshiba (parent
company) are different.
But what would be best for the industry?
My
own view is that if WDC succeeded in acquiring all of Toshiba's memory and SSD
assets in 2017 or 2018 the effect would be to reduce the ability of the SSD
market to be as competitive internally and also (although less important) reduce
the ability of the SSD market to compete as aggressively with the hard drive
market.
Another factor is the effect of competition inside the memory
market and the effect on the emerging market for tiered big memory.
This
is a market which is working to the benefit of users because there are pressures
for flash to displace DRAM and a market climate which is nurturing the growth of
new nvms which (although small in revenue terms now) could in the long term
displace a fraction of the flash or DRAM markets.
In 5 years time
such an acquisition (a major memory supplier being acquired by one of the two
remaing hard drive companies) may not matter so much - because the SSD and
memory systems market will have moved to new levels of efficiency and systems
level utilization. But right now - I can see more negatives than positive for a
competitive SSD market if such a deal were to go ahead. | | |
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| "In this period even
non technical people who couldn't name a single SSD product from the Western
Digital stable would be aware from a wide range of media outlets that it had a
stakeholder interest in the sale of Toshiba." |
| the Top SSD Companies -
Q1 2017 (May 19, 2017) | | |
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| Toshiba - update on the
suitors |
Editor:- May 25, 2017 - A
report
in the Japan Times says "Toshiba has told its creditor banks that it
will be difficult to select joint venture partner Western Digital as the buyer
of its chip business."
A
news
story in Nikkei names the 4 other companies still interested in buying
Toshiba's memory unit as:- KKR, SK Hynix, Broadcom and Foxconn. | | |
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| Toshiba's directors choose
Japan based consortium as buyers of memory business |
Editor:- June 21, 2017 - the long running
speculation about
who's
going to buy Toshiba's memory business may soon be over.
Toshiba today
announced
its board of directors have resolved to select the consortium of Innovation
Network Corporation of Japan, Bain Capital Private Equity LP, and Development
Bank of Japan a preferred bidder in respect of the sale of Toshiba Memory
Corporation.
Toshiba said its intention is to reach a mutually satisfactory
definitive agreement with the Consortium by the date of its annual ordinary
general meeting of shareholders, scheduled for June 28.
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| Toshiba
samples QLC says it will sue WDC |
Editor:- June 28, 2017 - Here are 2 news stories
about Toshiba.
Toshiba
said
yesterday that it is sampling the world's first 3D (64-layer), QLC
(quadruple-level cell) flash memory to
SSD controller makers
for characterization.
The 768Gb chips are believed to be the highest
density nvms currently available from anyone.
Editor's comments:- this
is an extraordinary achievement for the
nvm market. And you can
judge how difficult it has been by comparing the actual timing to the earliest
optimistic market expectations.
In February 2008 - Lane Mason - who
at that time was at Denali
Software and was one of the few people on the planet writing about such
detailed matters - said - in the Denali blog - the industry expected the
transition to 4-bit MLC cells, by 2012. So it has taken 5 years longer. (Lane
is now at Objective
Analysis BTW.)
The other Toshiba news story -
Toshiba
Misses its Deadline for a Deal for its Microchip Unit (NY Times) - is
another episode in the much delayed (although not as much as QLC)
serialization
of the sale of Toshiba Memory - which many viewers had mistakenly believed
had already publicly aired its season 1 finale. Among other things the NY
Times article says this...
"Toshiba said it was suing Western
Digital for about $1 billion over its attempts to block the sale of the chip
unit..." ...read
the article | | |
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| WDC secures
advance warning of Toshiba nand asset changes |
Editor:- July 14, 2017 - Western Digital
annnounced
today it has obtained a court order to prevent Toshiba transferring its
interests in jointly held nand flash assets without giving prior notice to WDC's
SanDisk subsidiary
(which shares some of these resources) "to ensure that the issue is
preserved for arbitration."
A follow up
story
in Japan Times clarifies that the notice period is "2 weeks"
and furthermore says "Toshiba lawyers have contended in court documents
that any sale of the chip division was not expected to close until early next
year, at the earliest." | | |
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| more
updates on WDC's dancing around Toshiba's memory business |
Editor:- September 6, 2017 - here's a noise
filtered reduced summary of recent news reports about the continuing
saga
of Toshiba's forced memory business sale.
Reuters
(September 1, 2017) quoted extracts from a letter written by WDC's CEO to
Toshiba - in August - which regrets the "significant ill will" felt
by Toshiba caused by tensions between the 2 companies which have arisen as a
result of the sales process.
Among other things WDC employees had been
locked out of Toshiba plants and databases which had shared ownership in July
according to a
report
by Silicon Valley Business Journal (July 19, 2017).
Coming up to
date (September 6, 2017)
Nikkei
reported that WDC "has asked to buy some chip production capacity at
fabrication facilities in Yokkaichi, Japan, in which it jointly invests with
Toshiba" to guarantee its share of memory chips produced at the plant.
This nice legalistic distinction of owning machinery is
described as a possible way to avoid delays in transferring funds to Toshiba
which a would be inevitable due to regulator scrutiny if WDC were to purchase
the company.
A fascinating noisier picture of how WDC and Toshiba
have been dancing around these issues in recent weeks can be seen in this
new (September 5, 2017) timeline on SeekingAlpha -
WDC
and Toshiba - Why This Time Is Different. | | |
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| "Western
Digital's Strength Revealed by Apple's Tantrum" |
headline
of a blog on Barrons.com (September 11, 2017) reporting an analyst
opinion from BTIG Research
Editor's
comments:- In this context the rights to access memory supplies is like
access to water rights in arid zones. I'm thinking - the Big Muddy in the Big Country
(the western starring Gregory Peck). | | |
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| Toshiba
says it will sell memory business to Bain led consortium |
Editor:- September 20, 2017 - Toshiba today
announced
its long awaited decision about who it has chosen to sell its memory business
to. It's a consortium led by Bain Capital using an acquisition cutout filter
created for this purpose called K. K. Pangea. The transaction (worth about $18
billion) is "expected to close by the end of March 2018."
Editor's
comments:-
earlier
reports which had speculated about the identity of members of the
consortium named at various times Dell, Apple and Seagate.
Toshiba
said in the above announcement "Western Digital has sought to prevent the
sale of the interests of the joint parties (meaning Toshiba and WDC) to any 3rd
party and Toshiba and WDC are currently engaged in litigation and arbitration."
An
article
on Bloomberg about the announced sale process says "The consortium
members weren't named in Wednesday's statement to the Tokyo Stock Exchange." | | |
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| Toshiba and
Western Digital bury the hatchet over flash |
Editor:- December 13, 2017 - Toshiba and Western Digital
today
announced
a global settlement agreement to resolve their ongoing disputes in litigation
and arbitration, strengthen and extend their relationship, and enhance the
mutual commitment to their ongoing flash memory collaboration.
The parties' agreement to resolve all outstanding disputes ensures
that all parties are aligned on Toshiba's sale of TMC to K.K. Pangea, a special
purpose acquisition company formed and controlled by a consortium led by Bain
Capital Private Equity, LP ("Bain Capital"). The parties have agreed
on mutual protections for their assets and confidential information in
connection with the sale of TMC, and on collaborating to ensure the future
success of TMC as a public company following an eventual IPO. | | |
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| Toshiba
memory sale reenters What If? zone |
Editor:- April 24, 2018 - The
sale
of Toshiba's memory business still has the potential to unravel
according to various reports which note that regulatory delays have delayed
completion of the deal with Bain (announced
September 2017)
into a different market territory in which Toshiba's parent no longer needs the
proceeds to remain solvent and the value of the flash memory memory business
is not the same as it was.
- JapanTimes
- "Toshiba and Bain want to finalize the current agreement, but they can't
wait forever..."
- Electronics
Weekly - "Activist investor Argyle Management of Hong Kong says the
memory unit could fetch $40 billion in an IPO, whereas the Bain/Hynix sale will
only bring in $18.6 billion."
- ZDNet
- "...the tech giant has missed a deadline of March 31, due to Chinese
antitrust regulators, which are yet to permit the acquisition to take place."
timeline
of Toshiba's forced memory sale | | |
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| can memory
chips be made in the wrong place? |
| Zsolt Kerekes,
editor - StorageSearch.com
- April 30, 2018 |
Is a memory chip in Country A
worth the same in Country B?
If supplies were plentiful, and if
there was efficient and effective competition, and low barriers to free trade
and market entry - then the answer would be:- Yes.
Superficially
enough of those conditions seemed to prevail worldwide upto about 3 years ago
that if anyone had tried to create a new mainstream civilian memory company
(in the DRAM or
nand flash markets) then
the effort would have been viewed as maybe being nuts. Why bother? There would
have been little appetite to invest in such a new semiconductor venture. The IP
barriers alone were strong enough to deter such efforts and the risks and
rewards from the competitive side (plentiful cheap memory and "forever
downwards - like gravity" price projections) would have been sufficient
deterrents to such investments.
Now
fast forward to today.
The
supplier
position power exposed by the memory shortages coupled with geopolitical
sensitivities which received serious airing and analysis in the
2017
beauty pageant of who might be a fit buyer of Toshiba's memory business
exposed the strategic sensitivities of the memory business.
And
recent actions by US regulators to block technology sales to significant
China based technology companies which fell afoul of well known US sanctions
on 3rd party countries (for example
ZTE
survival at risk amid US ban - said SeekingAlpha.com while
ZTE
says US penalties are 'unfair'- said ChinaDaily.com.cn) coupled with the
recalculation of value effect inevitably inspired by asking what would happen
if something like recently imposed
US
tariffs on photovoltaics were to be applied on memory chips by any country
for any reason - is creating a climate in which the Country A versus Country
B question may change the assessment of investing in new memory companies to
include a stronger weighting to the geographic question of where the
customers are compared to the factories which make the chips.
I'm also
assuming here that another factor in reopening this type of question is that the
imbalance between memory supply and demand may have changed from its
historic
pattern of quickly rebalanced balance - to becoming (for maybe several
more years yet ) - unplentiful and higher priced memory becoming the new
normal. Here are some articles which discuss the temperature of thinking.
- A blog on AnandTech -
Chinese
DRAM Industry Spreading its Wings: Two More DRAM Fabs Ready (April 25,
2018) - says "Innotron Memory and Fujian Jin Hua Integrated Circuit, are
gearing up for volume production of computer memory in the coming month. Both
manufacturers were founded with the help of the Chinese government, their output
will initially be consumed locally."
Older readers will
remember that the question of whether memory chips might need passports and
visas to travel from one part of the world to the other (and the related
question of what kind of buyer reception these coach class chip tourists would
get when they arrived) was for many decades the norm. It was only in the dotcom
era that we got used to just in time inventories for manufacturing and the
free movement of consumer grade technology parts zigzagging their way around
the factories of the planet like the shadows of drunken satellites.
Maybe
there isn't enough effective competition in the memory market and it took
the lack of headroom in supply to show our vulnerability to these strategic
links and dependencies. | | |
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I hope you found the above
collection useful.
This story hasn't ended yet. And I'll add more
stories later.
For more reading see:-
SSD market analysts,
popular SSD
articles, nvm news |
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