Toshiba's Chips Are Past Their Sell-By Date, And Investors Are Buying American

Turmoil in Japan has semiconductor stocks on the move, as Toshiba faces pressure on two fronts over the sale of its highly-prized chip business.

The company failed to sell the business by Wednesday, a self-imposed deadline coinciding with its annual shareholder meeting.

The Offers

Toshiba had no lack of offers, including ones from Broadcom Corporation BRCM, a Foxconn-led consortium including Apple Inc. AAPL and Dell Technologies Inc DVMT.

Management ultimately decided on a Japanese government-led group, including Bain Capital and South Korean competitor SK Hynix, as the preferred bidder.

The deal was delayed though, by concerns among management of technology leaks to South Korea and a lawsuit from Western Digital Corp WDC, claiming Toshiba can't sell the chip business which Western Digital is a major investor in.

Western Digital submitted a bid for the business on Wednesday, and Toshiba fired back with a $1 billion countersuit.

Management faced an angry crowd at the shareholder meeting, with one man saying during the Q&A period, “This has become a third-rate company, but you have no sense of crisis,” according to the New York Times.

The Movers

As Toshiba shareholders railed against management, investors across the world woke up and rallied towards American semiconductor stocks, pushing them higher in Wednesday’s pre-market session.

• Advanced Micro Devices, Inc. AMD shares were up 1.7 percent on the open to $13.70 before pulling back below Tuesday’s close.
• Cypress Semiconductor Corporation CY shares opened up 5 percent, and briefly hit 7 percent, before holding steady around $13.90.
• Micron Technology, Inc. MU shares were up 1.4 percent on the open to $32.18 before pulling back to just below Tuesday’s close.
• NVIDIA Corporation NVDA shares were up 1.7 percent on the open, and briefly dipped below Tuesday’s close, but were up about 1 percent as of 10:10 a.m. ET.

Related Links:

Changing Chip Dynamics May Favor Advanced Micro Devices Over Intel

Abe Allure Could Drive Japan ETFs Higher