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, other sources said. The bid has reportedly drawn interest from global buyout firms Bain Capital, KKR (KKR.N), Apollo Global Management (APO.N), as well as government-backed Japan Investment Corp.
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 (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.
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