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Toshiba to Split Off Memory Chip Ops

Brian Santo
1/27/2017

Toshiba today said it is looking to somehow split off the memory portion of its semiconductor business. The company said it hasn't made any decisions on any of the details of the split, except to say the memory operation will end up a wholly owned standalone company and that it wants the process done by March 31 -- the end of its fiscal 2016.

Toshiba Corp. (Tokyo: 6502)'s announcement confirmed a report that Bloomberg filed a few days ago that said Toshiba had hired a Wall Street bank to explore a sale.

Toshiba gave two reasons for initiating the process. Toshiba intends the new corporate structure to put the operation in better position to compete in the market for leading-edge memories, which is at the beginning of a major transition to a new three-dimensional (3D) processing technology.

"Timely investments, accelerated development time and the ability to ramp up the production of large capacity, highly reliable 3D memory devices (BiCS Flash) are essential to meet growing demand for storage," the company said.

Toshiba said it considers IC memory one of its core businesses. It's a prestige operation for Toshiba. Not only did the company invent flash memory, but the newest generation of flash is shaping up to become an important enabler for improving data center operations.

The second reason Toshiba said it is splitting off the memory operation is purely financial. The company bought a contractor called CB&I Stone & Webster that specializes in nuclear power plant construction. The acquired company's operations are a complicated mess, and the particulars of the transaction are still disputed -- the short story is that Toshiba is facing a $1 billion hit if things don't go its way.

And that is just piled on top of two scandals of Toshiba's own making, one from 2015 involving several of its operations (including semiconductors) inflating sales figures, the other from last year involving its nuclear power operation. Toshiba needs the money.

The company said the memory business is on pace to do about $47 billion in revenue for its fiscal 2016 (which ends March 31) and net close to $1.3 billion, using today's exchange rates. That compares to FY2015 revenue of $49.2 billion and a loss of nearly $4 billion.

— Brian Santo, Senior Editor, Components, T&M, Light Reading

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Ford65
Ford65
5/3/2017 | 4:03:06 AM
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