Japan Urges Toshiba, Western Digital to Get Along as Chip Spat Flares

Japan’s government said on Tuesday it wanted Toshiba and partner Western Digital to cooperate, expressing concern about an escalating dispute between the two that threatens to upend the sale of Toshiba’s chip unit.

Western Digital sought international arbitration this week to stop Toshiba from selling the unit without its consent, arguing that the Japanese conglomerate has violated contracts relating to their joint venture that operates Toshiba’s main semiconductor plant.

The California-based firm is one of the bidders for the world’s second biggest NAND chip producer, but is not among the frontrunners after submitting a much lower offer than other suitors, a source with knowledge of the matter has said.

“It’s very important for Toshiba and Western Digital to cooperate, Trade Minister Hiroshige Seko told reporters at a regular briefing on Tuesday, although he added that the ministry did not intend to intervene in the dispute.

His comments come after media reports that one of the proposed deals under discussion among government circles is to have chip unit – which is valued by Toshiba at at least $18 billion – brought under control of the state-backed Innovation Corporation of Japan (INCJ) fund.

INCJ and U.S. private equity firm KKR & Co LP are widely expected to be the main players in a consortium which will take part in a second round of bidding.

However, some INCJ officials are cautious about making a large-scale deal, sources familiar with the matter said, declining to be identified as they were not authorised to speak publicly about the matter. The fund has just 1 trillion yen ($8.8 billion) in its war chest for acquisitions and investment.

Japan Urges Toshiba, Western Digital to Get Along as Chip Spat FlaresThe Financial Times reported on Tuesday that some senior members in Prime Minister Shinzo Abe’s administration have privately discussed offering up to $8 billion in government loan guarantees to support a INCJ-KKR bid.

Japan government spokesman Yoshihide Suga said, however, that there was no truth to the report. A spokeswoman for INCJ declined to comment.

Shares in Toshiba, which is depending on the sale of the chip unit to cover billions in dollars in cost overruns at its now bankrupt US nuclear unit Westinghouse, slid to end down 12 percent. The cost of insuring against default for Toshiba’s five-year yen debt also spiked 10 basis points higher.

“While we believe that the successful sale of its chip business is indispensable for Toshiba to remain a going concern, hurdles to realising such a goal are increasing,” said Masako Kuwahara, a senior analyst at Moody’s Investors Service.

Toshiba said it had not yet decided whether to proceed with a threat to block Western Digital employees from the plant as well as databases if the US company did not sign a broad collaboration agreement that the two had negotiated. CEO Satoshi Tsunakawa said on Monday that he would make a decision on the matter on Tuesday.

Other suitors for the chip unit include Taiwan’s Foxconn and US chipmaker Broadcom but are also seen as less attractive options. Foxconn may face opposition due to its deep ties to China as the government has said it will block any deal that risks key technology leaving Japan, while Western Digital has said it is vehemently opposed to Broadcom.

Sony Ends PS3 Production in Japan

It seems that the PS3 is finally on its way out. The 500GB PS3 – which was, until a couple of months ago, the only variant in production in Japan has ended its production run.

This comes via the official PlayStation Japan website that lists the PS3 500GB shipments as “ended” according to a translation from gaming blog Gematsu.

Earlier in the year, Sony’s site stated that “shipments are scheduled to end soon” for the 500GB PS3, which was at the time the only remaining PS3 in production in Japan.

As for India, several retailers speaking to Gadgets 360 have confirmed that the 500GB PS3 has been unavailable for the better part of a year, while the 12GB variant has also been tough to get a hold of.

Sony Ends PS3 Production in Japan“We haven’t received any PS3 stock since November, and the demand hasn’t been there either. Not for the console nor the games,” says an independent game store owner based in Delhi.

What’s more is sources in the supply chain claim that Sony India’s focus has been squarely on the PS4 with the goal to double its sales on that console. So much so that the PS3 has not shown up on order lists that the company sends to game stores on a monthly basis.

And while Sony India hasn’t commented on this just yet, we won’t be surprised if the axe has silently fallen on the PS3. Launched in November 2006, it was a tough sell after being announced with a $599 price point by Sony’s Kaz Hirai.

However, it managed to recover thanks to a host of solid exclusives and astute price cuts ending up selling close to 84 million units, with around 350,000 of them in Japan.

Japan Launches New Satellite to Improve GPS

Japan on Thursday launched a new satellite to improve the global positioning system’s (GPS) accuracy and establish an efficient communication system in the event of natural disasters.

The Japan Aerospace Exploration Agency (JAXA) and Mitsubishi Heavy Industries launched the latest version of the H-IIA rocket with the Michibiki 2 communications satellite on board from the Tanegashima Island space centre in Kagoshima prefecture at 9.17am.

Michibiki 2 is Japan’s second Quasi-Zenith satellite, which is a device designed to improve global navigation and augment signals emitted by the US GPS, Efe news reported.

Japan Launches New Satellite to Improve GPSThe first Michibiki satellite was launched in September 2010. JAXA plans to launch two more by March 2018.

Once the system installation is completed, smartphone users and automotive navigation systems will receive more accurate map information.

The Japanese government also plans to use these satellites to establish a network to improve communication efficiency when traditional networks stop functioning due to natural disasters.

The objective is to avoid a situation similar to what occurred after the earthquake and tsunami on March 11, 2011, which left some 29,000 mobile phones and over 1.9 million landline phones disconnected, hindering search and rescue operations.

Japan plans to start testing the system in 2018 and launch another five satellites between 2018 and 2023, including the two set to be launched in 2018.

The system will enable smartphones of people affected by natural disasters to communicate with the security forces, firefighters, hospitals or the Japan Meteorological Agency (JMA) through text messages.

Intelsat Expects $14 Billion OneWeb Merger Deal to Fail

Satellite operator Intelsat SA said it expected its $14 billion merger with peer OneWeb Ltd, which is backed by Japan’s SoftBank Group Corp, to fall through as it failed to get enough of its creditors to back the deal.

The US satellite startup and debt-laden Intelsat had agreed to merge in a share-for-share deal in February.

SoftBank in February also offered to buy voting and non-voting shares in the combined company for $1.7 billion (roughly Rs. 10,980 crores) in cash and take a 39.9 percent voting stake.

The merger and SoftBank’s investment were both conditional on approval from Intelsat’s bondholders.

Intelsat said on Thursday it had terminated a series of debt swap offers tied to the deal as its creditors did not accept the terms by May 31 deadline.

Intelsat Expects $14 Billion OneWeb Merger Deal to Fail“There were many stakeholders’ interests that needed to be satisfied in this complex transaction,” Intelsat Chief Executive Stephen Spengler said in a statement.

Reuters had reported on Wednesday that SoftBank would let the merger drop.

Intelsat’s shares had fallen nearly 48 percent since the merger was announced in February.

iPhone Manufacturing in the US Being Considered by Apple: Report

Apple is reportedly studying possibilities of moving iPhone production from China to the US. A new report by Japanese publication Nikkei Asian Review, which has had an excellent track record with Apple leaks, claims that the Cupertino-based company has asked two of its major manufacturers – Foxconn and Pegatron – to explore plans to move manufacturing to the US.

Apple’s move to studying the ideas to change its manufacturing base to the US is inspired by President-elect Donald Trump’s previous pledge where he claimed that America-based companies will be pushed to manufacture at home instead of other countries.

In its report, Nikkei Asian Review cites a person familiar with the matter as saying, “Apple asked both Foxconn and Pegatron, the two iPhone assemblers, in June to look into making iPhones in the US. Foxconn complied, while Pegatron declined to formulate such a plan due to cost concerns.”

On manufacturing the iPhones in the US, Apple’s CEO Tim Cook had previously told CBS’ 60 Minutes program that “America simply did not have enough skilled workers for the production of iPhones.” Several Apple devices sport the ‘designed in California’ tag at the rear though the products are mostly made in China.

iPhone Manufacturing in the US Being Considered by Apple: ReportNikkei also quotes an industry executive familiar with the iPhone production process who also claimed that it would be difficult to produce the iPhones in large quantities in the US.
“To make iPhones, there will need to be a cluster of suppliers in the same place, which the US does not have at the moment. Even if Trump imposes a 45 percent tariff, it is still possible that manufacturers will decide to continue production overseas as long as the costs together with the tariffs are lower than the amount they need to spend on building and running production lines in the US,” executive told Nikkei.

Another industry source told Nikkei, “It is not easy to make iPhones in America, unless the US government subsidises local companies for producing domestically.”

Some of the third-party suppliers that are major suppliers for Apple’s iPhones include TSMC (Taiwan Semiconductor Manufacturing Co) which supplies chips for iPhones; Japan Display and Sharp supplies panels for iPhones, and SK Hynix and Toshiba supply memory chips for iPhones.

Out of several suppliers, Sharp has been one of the companies that is ready to move manufacturing to the US while TSMC has been “clear that it would be much more expensive to make chips outside of Taiwan,” according to Nikkei.

At this moment, it isn’t clear whether Apple has made its mind to start manufacturing in the US though if this turns out to be true then we might see increase in iPhone prices in future.