Mitsubishi Corp considering bid for Fujitsu's chip unit Shinko Electric -sources

Ibiden Co

17/10/2023 11:02

(Changes sourcing on private equity interests in Shinko in
paragraph 3)
    By Makiko Yamazaki and Maki Shiraki
       TOKYO, Oct 17 (Reuters) - Mitsubishi Corp  8058.T  is
considering bidding for Fujitsu's  6702.T  chip packaging unit
Shinko Electric Industries  6967.T , two sources said, as
Japan's top trading house weighs an entry into semiconductor
manufacturing.
    Mitsubishi, owned 8.3% by Warren Buffett's Berkshire
Hathaway  BRKa.N , has set up a team to explore the possibility
of entering the so-called back-end manufacturing process, which
involves mounting chips on frames, connecting wires and
packaging, the sources, who are familiar with the matter, said.
    Fujitsu has put its 50% stake in Shinko Electric, worth
around $2.6 billion at current market prices, on sale, drawing
interest from global buyout firms Bain Capital, KKR  KKR.N ,
Apollo Global Management  APO.N , as well as government-backed
Japan Investment Corp (JIC), two other sources said.
    KKR, Bain and JIC declined to comment while Apollo did not
respond immediately to a request for comment. 
    Mitsubishi is planning to make a joint bid with one of the
potential buyers, one of the two sources said. Those talks are
at an early stage and Mitsubishi has not decided on a partner,
the source added.
    A Mitsubishi spokesperson said the trading house had set up
a division in June dealing with chips and materials that was
looking into various opportunities. However, the spokesperson
said the company could not comment on individual deals.
    A Fujitsu spokesperson said: "It is true we are considering
various options to maximise the value of the independent
business, but nothing has been decided at this time."
    A Shinko spokesperson declined to comment. The sources did
not wish to be identified as the information is private.
    There is no guarantee a deal would go through, the sources
said. It was also not clear if Mitsubishi had hired banks to
advise on the deal. 
    The sale of Shinko, a major supplier to chip companies such
as Intel  INTC.O  and Advanced Micro Devices  AMD.O , could also
face national economic security issues, sources said.
    For Mitsubishi, a sprawling conglomerate whose businesses
range from natural gas to convenience stores and clothing, a
foray into chips would come as recent volatility in energy
prices takes some shine off a record annual performance. 
    It would also bring one of corporate Japan's most powerful
companies into chips at a time when Japan is looking to
revitalise an ageing semiconductor industry that dominated the
world in the late 1980s before losing ground. 
    Still, semiconductor packaging remains an area of strength
for Japan with Shinko, Ibiden  4062.T  and Toppan Holdings
 7911.T  all major players in the global chip supply chain.
    Japan has designated chips as "specified critical
materials", spending billions of dollars as subsidies to boost
its ability to produce advanced chips and to maintain its edge
as a maker of materials and manufacturing tools.
    A deal would also come amid a number of new investments in
chips announced recently in Japan.
    Taiwan Semiconductor Manufacturing Co (TSMC)  2330.TW  is
building a $7 billion chip plant on Kyushu island, while Japan's
state-backed Rapidus is building a chip plant in Chitose.
    Japan is also arranging subsidies that could be worth around
15 billion yen for Samsung Electronics  005930.KS  for the chip
facilities it is considering setting up, Reuters has reported.
($1 = 149.4700 yen)

 (Reporting by Makiko Yamazaki and Maki Shiraki; Additional
reporting by Miho Uranaka; Editing by David Dolan, Muralikumar
Anantharaman and Emelia Sithole-Matarise)
 ((Makiko.Yamazaki@thomsonreuters.com; +81-3-4563-2805;))