Mitsubishi Corporation (TSE:8058) is considering bidding for Fujitsu Limited (TSE:6702)?s chip packaging unit Shinko Electric Industries, 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, 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, other sources said.
The bid has reportedly drawn interest from global buyout firms Bain Capital, LP, Kohlberg Kravis Roberts & Co. L.P. (NYSE:KKR), Apollo Global Management, Inc. (NYSE:APO), as well as government-backed Japan Investment Corporation. 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 two 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 and Advanced Micro Devices, could also face national economic security issues, sources said.