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Toshiba Might Spin Off Its Semiconductor Business (fortune.com)
Toshiba is considering spinning off its semiconductor business and selling a partial stake in the unit to Western Digital, the Nikkei financial daily reported on Wednesday. From the report: Toshiba will sell a roughly 20% interest in the unit for about 200 billion yen-300 billion yen ($1.77 billion-$2.66 billion) while retaining a majority stake, the newspaper reported. Besides Western Digital, U.S. investment funds are also showing interest in Toshiba's semiconductor business, the Nikkei reported, sources familiar with the matter.
...aren't semiconductors what basically underpin nearly all of Toshiba's products
Sure. But like most users of semiconductors, they can just buy what they need. There is no reason to make stuff in-house unless it is a core competency that you are good at. Toshiba is not particularly good at making semiconductors.
Toshiba is financially distressed, and they need to raise cash, so that is why they are selling off chunks of the company.
Anyway, under the terms of this deal, they will retain majority control, even though it would likely make more sense to sell the semiconductor division off completely. Indecisive, partial solutions like this are typical of the Japanese management style, and are a big reason why Toshiba is in trouble in the first place.
Indecisive, partial solutions like this are typical of the Japanese management style, and are a big reason why Toshiba is in trouble in the first place.
Aren't they in trouble because they overstated profits by about $2B in a giant corporate accounting scandal spanning 7 years and purging their CEO and board members?
The main reason is Fukushima. Toshiba (and Siemens, and Alstom) had made huge investments in nuclear power in the years just before 2011. Coal power was obviously a dead product in 1st world countries even then, natural gas is expensive in many countries (except the USA), and renewables need a weather-independent backstop. A nuclear renaissance appeared to be on the horizon, every major compeditor was preparing for it. Alstom build a huge new facility in Chattanooga ($300M+)and spent roughly $1B in Nuclear investments in total.
The value of Toshiba's investment was well over $1B (some people have quoted me $2B) into nuclear in the years leading up to 2011. That included purchasing the nuclear parts of Westinghouse, which turned out to be a huge scam in itself (Westinghouse Nuclear's talent had retired or departed years before, and arguably they weren't very good even in their prime). After the earthquake, the value of that investment basically plunged to 0. Possibly less than 0 since they had been hiring in anticipation of a boom, and those people now were not earning their keep.
Combine that with a global slowdown, and uncertainty about any kind of fossil fuel plant (Toshiba sells a lot of conventional turbines too), and they were on shaky ground even without the accounting inconsistencies.
I am a former Toshiba employee in the power segment so am posting anonymous for obvious reasons.