Foxconn may table $26.99 bn bid for Toshiba Corp's chip business

Taiwan's Foxconn Technology Group, the world's largest electronics manufacturer, has indicated that it may table a 3 trillion ($26.99 billion) bid for Toshiba Corp's chip business, Bloomberg yesterday reported, citing people familiar with the matter.

South Korea's SK Hynix and US chipmaker Broadcom have also submitted preliminary bids of around 2 trillion ($17.98 billion) or more, but Foxconn's potential offer is much higher than analysts' $18 billion valuation for the business, the report said.

In February, debt-laden Toshiba decided to sell its flash memory chip business to save the group from the impact of a $6.3 billion write-down at its US nuclear business.

Last month it warned that its net loss for 2016 could exceed 1 trillion ($9 billion) - one of the biggest losses in Japanese corporate history.

Toshiba is the world's second-largest NAND chip manufacturer after South Korea's Samsung Electronics Co Ltd, and its products are used in data centres and consumer goods worldwide, including Apple's iPhones and iPads.

The sale would include businesses that handle system LSI and discrete chips, which are used in cars, home appliances and industrial machinery, but not Toshiba's NAND flash memory operations.

But the Japanese government wants a local company to buy Toshiba's chip business, but none has emerged yet, and Hynix is in talks with Japanese investors on a joint bid, in part to overcome political hurdles, Bloomberg said.

Japan's chief cabinet secretary Yoshihide Suga has said flash memory chips are ''extremely important'' for Japan's growth strategy.

Japanese lawmakers are concerned that Foxconn would shift Toshiba's manufacturing plants to China, where labour is cheap and may also transfer Toshiba intellectual property to China.

Foxconn, also known as Hon Hai Precision Industry Co, last year acquired a majority stake in struggling Japanese electronics company Sharp for $3.5 billion.