TOKYO: Toshiba has firmed up plans to unload a large portion of its semiconductor-manufacturing operations as part of sweeping reforms to improve profitability in the wake of an accounting scandal.
The Japanese company plans to keep NAND flash memory operations, its biggest profit source and a field where its market share is second only to Samsung Electronics. Product lines up for sale include analog chips, LSI chips, microcontrollers and power-saving semiconductors. Applications include cars, industrial machinery, home electronics and housing construction equipment.
Annual sales of these products apparently total around 200 billion yen ($1.68 billion). Toshiba is likely to pocket some 200 billion yen from selling the operations and would invest the money in such projects as expanding memory chip fabrication facilities in Yokkaichi, Mie Prefecture.
The company has opened up bidding, with the Development Bank of Japan the first to throw its hat into the ring. The government-backed fund operates a semiconductor joint venture with Seiko Holdings and seeks a tie-up with Toshiba’s chip business. Other funds are also expected to place bids. Toshiba intends to choose a buyer by the end of March. It could retain partial ownership, depending on the buyer’s terms and customer interest.
The move is part of restructuring measures in the semiconductor business. Toshiba has already agreed to sell image sensor production facilities in Oita to Sony and is exiting the money-losing business of white light-emitting diodes.
A similar narrowing of focus is afoot on a companywide level. Toshiba is discussing integrating its computer business with that of Fujitsu or another candidate and is considering merging white goods operations with those of Sharp. It plans to cut 10,000 jobs as well.
As restructuring costs mount, Toshiba is expected to report a 550 billion yen net loss for the fiscal year ending March 31. The company intends to sell profitable unit Toshiba Medical Systems as it braces for further financial blows.
Toshiba will concentrate on flash memory as well as nuclear and coal-fired power plants, an area where it can remain competitive internationally. Nuclear plant unit Westinghouse will market state-of-the-art reactors, mainly in India and other emerging economies. Toshiba aims to wrap up structural reforms in fiscal 2015 and foster growth from fiscal 2016 on.