Speculation is building that Irvine-based Western Digital Corp. is in line to bid on a significant portion of Toshiba Corp.’s flash memory business as the Tokyo conglomerate faces staggering write-downs from its failing U.S. nuclear power business.
News reports in Japan indicate that WD could bid on 20% of Toshiba’s memory chip business, a stake valued between $1.8 billion and $2.6 billion.
The companies have been strategic partners for more than a decade, and last year through a joint venture established a 297,000-square-foot flash memory manufacturing plant in Yokkaichi, Japan.
A majority of Western Digital’s NAND-flash memory is primarily supplied through its business ventures with Toshiba, according to its annual report. NAND flash is the most popular rewritable memory chip used in USB drives, cameras, iPods, smartphones, tablets and other devices.
Securing a reliable supply chain of the key components has been a hallmark of success for Western Digital and Fountain Valley-based Kingston Technology Inc., the world’s largest maker of memory products for computers and consumer electronics with estimated annual revenue exceeding $6.5 billion.
An existing agreement with Toshiba mandates that Western Digital purchase half of the NAND wafer supply through the business ventures or pay for half of the operation’s fixed costs regardless of output. It’s also committed to fund about half of the ventures’ investments if operating cash flow is insufficient to fund the ventures, according to regulatory filings.
Western Digital has a 49.9% ownership position in each of its three flash ventures with Toshiba.
The latest development comes as Toshiba’s newly acquired U.S. nuclear-energy unit faces charge-offs between $4.3 billion and $6.1 billion, according to news reports, significantly higher than the company’s earlier estimate of $87 million. Toshiba recently received downgrades from Moody’s and Japanese credit rating firm R&I, warning of its negative equity position. The combined factors have jeopardized its listing on the Tokyo Stock Exchange, where it has traded since the exchange was established in 1949.
Musk’s Blizzard Crush
Count tech billionaire Elon Musk among the fans of Blizzard Entertainment Inc.’s recent video game titles and culture.
The CEO of SpaceX and Tesla Motors and OpenAI co-chairman praised Blizzard’s first-person shooter video game, “Overwatch,” and its free collectible card game, “Hearthstone,” a favorite with his children, when asked about his gaming recommendations. He also complimented the Irvine-based publisher’s development team for doing “great stuff.”
The comments came during a recent interview with Sam Altman, president of Stanford University’s noted Y-Combinator and co-chairman of OpenAI, a nonprofit artificial intelligence research company backed by Altman and Musk and fellow tech heavyweights Greg Brockman, Reid Hoffman, Jessica Livingston and Peter Thiel.
“Overwatch” and “Hearthstone” are big hits on the e-sports circuit and have amassed more than 40 million players combined.
Blizzard is Orange County’s largest software maker, with about 2,000 local employees and 2015 revenue of $1.56 billion.
Startup Partner
Fountain Valley speakers maker startup RIVA Audio has signed a partnership with Azione Unlimited, a business networking and consumer electronics buying group comprised of dealers, retailers, integrators and vendors.
RIVA was launched in 2012 and has raised $10 million in funding.
