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Taiwan’s Foxconn has approached Apple about a potential joint bid for Toshiba’s flash memory business in what could be a $28bn takeover battle. According...

Taiwan’s Foxconn has approached Apple about a potential joint bid for Toshiba’s flash memory business in what could be a $28bn takeover battle.

According to two people with knowledge of the talks, Foxconn — officially know as Hon Hai Precision Industry — has sought the backing of the iPhone maker to strengthen its position in a bidding war that has evoked strong national pride and a backlash against Japanese technology falling into the hands of foreign rivals. The US group is yet to respond.

Toshiba’s chip division has already drawn offers from US chipmaker Broadcom, which partnered with Silver Lake; Western Digital, a chip venture partner with Toshiba; and South Korea’s SK Hynix. Foxconn has indicated it might be willing to pay as much as $28bn, according to people involved in the talks.

Foxconn, which pulled off a $3.5bn takeover of Japanese consumer electronics group Sharp last year, is also tapping into close ties between its founder Terry Gou and Masayoshi Son, the chief executive of Japanese internet group SoftBank, to seek financing support from Japanese lenders. But SoftBank, which owns UK chip designer Arm Holdings, is unlikely to become directly involved in the bid, another person close to the company said.

The sale of Toshiba’s NAND flash memory business, valued at $18bn or more, is considered critical to the survival of the lossmaking Japanese industrial conglomerate. Doubts have risen about Toshiba’s future as a going concern after its US nuclear unit Westinghouse filed for Chapter 11 bankruptcy protection last month.

Analysts say that for Apple and other major customers of Toshiba, the financial health of the world’s second-largest NAND flash memory maker after Samsung Electronics is essential, especially since supply shortages are occurring as chip demand booms.

Apple has traditionally relied heavily on Toshiba’s flash memory for its iPhones and iPads, especially after relations with Samsung soured a few years back. While Apple also sources supplies from SK Hynix, having a stable choice of multiple suppliers would be ideal.

For Toshiba, the deep pockets of Apple, which has a $240bn cash pile, are attractive since the Japanese company will need to continue investing $3bn-$4bn each year to compete against Samsung, which is said to be six months ahead of its rival.

Even if Foxconn successfully partners with Apple, Japanese government officials could still block the sale because they have reservations about bidders with factories in China, said Akira Minamikawa, analyst at IHS Markit.

“The Japanese government, Toshiba and its partner Western Digital will likely do everything in their power to prevent any buyer that could potentially allow technology leakage to China and South Korea,” Mr Minamikawa said. “Partnering with Apple will not eliminate their concerns regarding Foxconn.”

Since the NAND flash memory market is dominated by Samsung and Toshiba, two other people close to the talks also said a direct investment by Apple in Toshiba’s chip business could raise anti-monopoly issues or other legal complications.

Apple, Foxconn, Toshiba and SoftBank all declined to comment.

Additional reporting by Tim Bradshaw in San Francisco

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