Tag Archive for Foxconn

Can Toshiba Stay in Business?

Can Toshiba Stay in Business?Updated 06-22-2017 – As predicted below, the NYT reports that the Japanese government formed a coalition including the US venture capital firm Bain Capital to buy Toshiba’s microchip division. Estimates are the deal is worth approx. $20 Billion.

Toshiba is being driven to sell off its crown jewel, its microchip business, to stabilize the international giant. The New York Times reports that the stalwart of Japan’s postwar rise as a global industrial giant warned that its has doubts over whether it could stay in business. In a filing in Japan, Toshiba said it wrote off more than $6 billion connected to Westinghouse Electric’s troubled nuclear reactor projects in the United States, had created “substantial uncertainty” over its ability to continue as a going concern.

ToshibaThe Toshiba microchip division is the number two global provider of NAND flash memory. NAND flash memory is a type of non-volatile storage technology that does not need power to retain data. Flash memory is electronic (solid-state) non-volatile computer storage medium that can be electrically erased and reprogrammed.

Toshiba originally invented flash memory in the early 1980s from EEPROM (electrically erasable programmable read-only memory). They introduced it to the market in 1984. Called flash memory, after the flash on a camera, the chips have become an essential building blocks of the modern electronics industry.

WestinghouseThe two main types of flash memory are named after the NAND and NOR logic gates. The individual flash memory cells have internal characteristics similar to those of the corresponding gates.

Where EPROMs had to be completely erased before being rewritten, NAND-type flash memory may be written and read in blocks (or pages) which are generally smaller than the entire device. NOR-type flash allows a single machine word (byte) to be written—an erased location—read independently.

NAND flash memoryThe NAND type operates primarily in memory cards, USB flash drives, some solid-state drives, and similar products for general storage and transfer of data. NAND or NOR flash memory is also often used to store configuration data in many digital products, a task previously made possible by EEPROM or battery-powered static RAM. One key disadvantage of flash memory is that it can only endure a relatively small number of write cycles in a specific block.

Toshiba manufactures its NAND Flash Memories at its Yokkaichi Operations to maintain quality.

Samsung Electronics Co. (005930) is the biggest maker of flash memory chips, followed by Toshiba, SK Hynix and U.S.-based Micron Technology (MU).

many as 12 companies have approached Toshiba with proposalsA sale of Toshiba’s chip business, while offering the business a lifeline, would take away its most successful business — and, more broadly, would represent a shift of a major technology away from Japan, depending on the buyer. The Toshiba sale is still in its early stages, and the NYT say as many as 12 companies have approached Toshiba with proposals. Reports are that Toshiba is asking bidders to value its operations at about $17.6 billion (2 trillion yen), and make at least a 50 percent investment.

One of the better-known suitors is Hon Hai Precision Industry, also known as Foxconn. Foxconn is the assembler of Apple (AAPL) iPhones and is world’s largest contract electronics maker. Foxconn is based in Taiwan but performs most of its manufacturing in mainland China. According to the article Foxconn could pay billions to buy the business.

offered $27 billionSources told Japanese public broadcaster NHK the first round of the Toshiba auction drew 10 offers. Toshiba has narrowed the field of bidders for its chip unit to four: U.S. chipmaker Broadcom (AVGO), a private equity firm Silver Lake Partners which reportedly offered $18 billion; SK Hynix; Western Digital (WDC); and Foxconn (2354), reports say Foxconn offered $27 billion.

Apple is considering teaming up with its supplier Foxconn to bid for Toshiba semiconductor business, Japan’s NHK reported. Apple is considering investing at least several billion dollars to take a stake of more than 20 percent as part of a plan that would have Toshiba keep a partial holding so the business remains under U.S. and Japanese control, NHK reported.

The authors point out Toshiba’s situation is a remarkable turnabout for Japan, a country that once controlled the majority of microchip markets. In the past Japanese companies have banded together to rescue flailing domestic rivals and not let them fold or be acquired by foreigners.

BankersThe article speculates that the Japanese government may cobble together a “team Japan” offer, but the response from potential participants — who would have to explain the spending to shareholders — has been tepid. “It is fundamentally unthinkable that the Industry Ministry would intervene and take some kind of action,” Hiroshige Seko, the industry minister, said at a news conference, further dampening expectations.

Mark Newman, an analyst at Sanford C. Bernstein, argued in a report that Toshiba’s memory business remained valuable enough that selling it amounted to “selling the crown jewels to pay next month’s rent.”

Apple teaming up with its supplier Foxconn to bid for ToshibaJapanese politicians and industry leaders have voiced concerns over Chinese investors’ buying advanced chip production technology; semiconductors and memory are a major priority of China’s industrial policy. That could hinder any deal with Foxconn, said Mr. Newman, of Sanford C. Bernstein.

The worry is that Foxconn “would build huge fabs in China,” Mr. Bernstein said, referring to semiconductor fabrication plants. “The jobs would move to China from Japan, and furthermore China would go after market share at the expense of crushing industry economics, so the U.S., Taiwan, Korea, Japan all get hurt substantially by this arrangement.” Foxconn has been successful in attracting subsidies from the Chinese government to build large-scale production facilities in China.

The article speculates that Foxconn could take the Toshiba technology and manufacture it more cheaply in China. Such a move could drive down pricing for memory, a boon for Apple and low-cost Chinese smartphone makers. But it would also propel China forward in its long push to become internationally competitive in semiconductors. Mr. Newman has warned that competition in NAND chips could heat up next year, creating the possibility of oversupply and putting more pressure on Toshiba’s ability to put in effect next-generation technologies.

Ralph Bach has been in IT for a while and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

SNL Slam Apple & Tech Press

Remember when Saturday Night Live was funny? Super Bass-O-Matic, Killer Bees, Hot Tub, Joe Cocker, Samurai Delicatessen, Coneheads or Schweddy Balls. Well SNL hit another home run.

In the clip below, they take up the hypocrisy of tech journalism. They poke fun of the nit-picking they are famous for versus the real human toll that Foxconn (2038) and Apple (AAPL) take on Chinese workers that churn out the latest igadget.

 

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LOL at the classic Chinese satirical dance. Too bad nobody in China will ever see this.

 

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

 

Foxconn Replacing 1 Million Humans with Robots

GreedI recently noted from the Bach Seat that the manufacturer all things digital,  Foxconn was moving production to Brazil from China because of rampant wage inflation. Now it seems that the Taiwanese technology giant has decided that to drop people from production altogether.

Foxconn workersTechEye reports that Terry Gou, founder and chairman of Foxconn (2038), told Xinhuanet that the firm will replace up to 1 million people with robots over the next three years. Mr. Gou told Xinhuanet that Foxconn now has 10,000 robots and the number will be increased to 300,000 next year and 1 million in three years. The manufacturer now has over 1.2 million employees with one million of them based in China.

Mr. Gou told Xinhuanet the robots will replace humans who do simple and routine work such as spraying, welding and assembling of products for firms such as Apple (AAPL), HP (HPQ), Cisco (CSCO), Dell (DELL), ASUS (2357), Intel (INTC), Microsoft (MSFT), Nintendo (7978) and Sony (SNE).

Foxconn needs to automate more of its manufacturing processes in order to make up for labor shortages and stay ahead of its competitors, said Amy Teng, an analyst with research firm Gartner (IT), told PCWorld.

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Mr. Gou told employees that he wanted to move the company’s workers “higher up the value chain, beyond basic manufacturing work,” according to a company statement cited by PCWorld.

While no one will deny that robots are efficient and they also don’t commit suicide due to harsh working conditions. But as we painfully know here in Detroit, robots create job losses, thus generating unintended consequences throughout the world economy.What could be the unintended consequences of 1 million unemployed Foxconn worker in the Peoples Republic of China?

If political leaders like former Gateway Computers CEO and Michigan Governor Dick Snyder and President Obama were truly interested in creating jobs in Michigan, they would be welcoming this announcement and pushing hard for Foxconn to build its robot factory in Detroit, where land is cheap and skilled robotics technicians cast off by the auto-makers can tend to the Foxconn robots.

iPad4, made in Detroit

Cisco to Cut 11,500 Workers

Cisco‘s (CSCO) two consecutive under-performing quarters finally prompted CEO John Chambers to take action. One of the first actions Cisco will undertake during reorganization is to sell a set-top box manufacturing plant in Juarez, Mexico. FierceEnterpriseCommunications reports that Cisco will sell the plant to Foxconn Technology Group, The plant has about 5,000 workers who likely will remain as employees of Terry Gou according to FierceEnterpriseCommunications.

CiscoIn addition the embattled CEO vowed $1 billion in cuts this year to Cisco’s expenses. Mr. Chambers announced plans to cut its workforce by 11,500. Cisco said about 975, or 15 percent, would be executives with job titles of vice president or above. A Cisco spokesperson said the employee reductions announced would be enough to reach the $1 billion cost-cutting target Chambers set in May.

FoxconnGleacher & Co. analyst Brian Marshall told FierceEnterpriseCommunications that the staff reductions were a good first step for Cisco, but he added that the remaining questions, e.g. how Cisco would fix the top line and drive revenue growth and product innovations, need answers.

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I wrote about Foxxcom’s expansion into the America’s here. This also looks like another step in the de-consumerization of the Cisco product line.

Ralph Bach has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

Money Makes the Tech World Gou Round

FMoney Makes the Tech World Gou Roundoxconn, Microsoft and Intel just reported financial results and things look different. Apple is more profitable than Microsoft, MSFT‘s most profitable division are toys and Intel says server growth for the mobile web is driving its growth.

Foxconn Profits Jump in 2010

Foxconn Foxconn, the world’s manufacturer of all things tech recently posted its latest earnings report. TechEye points out that despite inconveniences like having to pay workers a slightly larger pittance, and give them better working conditions, Foxconn has announced a 53 percent rise in consolidated revenues for 2010.  Terry Gou‘s company’s gross profit for the twelve months increased by 58.5 percent to NT$100.9 billion from NT$63.6 billion in 2009.

Digitimes says the figures are all better than market watchers’ forecasts. Market watchers originally expected rising labor and component costs would seriously impact Foxconn’s profitability in 2010, but the company’s strong revenues last year still managed to boost its overall profitability despite a drop of 1.37 percentage points in its gross margin from the 2009 level to 8.15%.

oxconn: Audited non-consolidated financial report, 1Q11 (NT$b)

Item

Amount

Y/Y

Revenues

554.011

33.56%

Gross margin

4.52%

down 0.20pp

Net operating profit

5.904

(34.44%)

Net profit

14.401

(19.94%)

Net earnings per share (NT$)

1.49

(19.89%)

Windows Sales Down Microsoft Profits Up 31%

Microsoft Microsoft (MSFT) profits grew 31 percent during its fiscal 3rd quarter ending March 31, 2011.  During this period, the software giant racked up $5.23 billion in profits, while revenues reached $16.43 billion, a 13 percent climb. These profits came thanks to strong performance from some nontraditional divisions.

MSFT’s Entertainment and Devices Division provided the biggest revenue gain. The home of Xbox and Kinect, Ballmer’s boys motion-sensing game controller increased sales by 60 percent to $1.94 billion.  This is the smallest of Microsoft’s product divisions so it only generated 11.8 percent of overall sales. According to CNET. Kinect drove sales, selling 2.4 million units in the quarter according to the New York Times. CNET reports the company sold 2.7 million Xbox 360 consoles in the quarter, a 79 percent increase from last year.

Microsoft‘s second-largest revenue generator this quarter was the Windows and Windows Live Division which had revenue of $4.45 billion. This represents a 4 percent decrease from last year’s $4.65 billion and net income fell 10 percent. According to CNET Redmond says Windows is the fastest-selling operating system in history with 350 million licenses sold.

The Server and Tools Division saw the next best performance. The home to Windows Server had sales of $4.1 billion, up 11 percent from a year ago. Profit for the unit climbed 12 percent. CNET says business adoption of Windows Server, SQL Server and System Center lifted the division’s results.

At the Business Division, home of Office, Microsoft’s revenue grew 21 per cent from last year according to the NYT . Thee NYT says the company’s Office software has no significant competition revenue grew to $5.25 billion. Office 2010 is the fastest-selling version of Office ever, Microsoft said, with businesses deploying the software at five times the rate of its predecessor.

Microsoft’s smallest revenue generator the Online Services Division, home of Bing  gained 14 percent in revenue to $648 million from $566 million.TechEye reports that Bing increased its share of the search market but Microsoft spent so much on promotion the division saw operating losses of over $700 million. Ballmers partners are not happy with these results.  Two years ago, Microsoft and Yahoo inked a deal to use MSFT technologies for Yahoo’s search  to help both fight off rival to Google. However, Yahoo’s chief executive, Carol A. Bartz, said that the partnership had not yielded the expected financial results for Yahoo and that technical glitches by Microsoft were to blame according to the NYT.

Intel Cashes in on Mobile Boom – Just Not on the Phone

IntelChip giant Intel (INTC) has finally found a way into the mobile market. After years trying to get its Atom chips into mobile devices, they are profiting from the demand for servers to feed the mobile devices. Intel Chief Financial Officer Stacy Smith told Bloomberg that the spread of mobile devices fuels “explosive” growth for processors used in data centers. “There’s a significant, maybe even an insatiable, demand driver for more and more performance and computing power that’s moving into the cloud,” Mr. Smith told Bloomberg. “What gets lost is the explosive growth of all of these devices connecting to the Internet is driving a $10 billion dollar server business.” Intel recently reported that its second-quarter revenue will be $1 billion more than analysts had estimated, in part driven by the data center boom.

 

Ralph Bach has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.