/

Toshiba Memory to create 5,000 new jobs in Japan, Bain executive says

Kyodo

Toshiba Corp.’s semiconductor-making subsidiary will create up to 5,000 jobs in Japan after its planned sale to a consortium led by Bain Capital, an executive at the U.S. investment fund said Tuesday.

The workforce additions at Toshiba Memory Corp. will take place at the company’s key Yokkaichi plant in Mie Prefecture, which is currently being expanded, and at a new plant in Iwate Prefecture that will start construction next year.

“For Toshiba Memory to grow, it is important that we invest in people,” Yuji Sugimoto, managing director at Bain, said in an interview.

Toshiba Memory is the world’s second-largest manufacturer of NAND memory chips. Demand for memory chips used in smartphones and data servers is growing as the amount of information being processed worldwide rapidly increases. Such investments at plants, though costly, are seen as key to contending with industry leader Samsung Electronics Co.

Toshiba is seeking to sell the chip unit by March to improve its finances and avoid a second year of negative net worth. Failure to do so would result in forced delisting from the Tokyo Stock Exchange.

The conglomerate’s woes first came to light when it admitted in 2015 that it had deliberately overstated its profits for years, leading to the resignation of its CEO. The scandal deepened when the company revealed huge losses at its now-bankrupt U.S. nuclear unit Westinghouse Electric Co.

Sugimoto said that to ensure proper internal controls are in place, the consortium is considering having Toshiba Memory set up committees — required by Japanese law — to consist of a majority of outside directors to make decisions on who sits on the board and how much they are paid.

Current Toshiba Memory President Yasuo Naruke will remain in the role, while Sugimoto will become an outside director, he said.

Sugimoto also said that unless Toshiba can reach a settlement by the end of October with its U.S. business partner Western Digital Corp., which is seeking to block the sale in court on the grounds that it violates their joint venture contract, future investments in the state-of-the-art Fab 6 facility currently under construction at the Yokkaichi plant will be carried out by Toshiba Memory alone.

Toshiba Memory is also eyeing the addition of an additional facility at the site, which currently employs 10,000 workers in total.

He stressed that reaching an agreement would be in Western Digital’s interest as failure to gain a stake in the new production facilities would deny it access to the profitable memory chips.

“If things remain as they are now, Western Digital will also suffer a hit to its operations,” Sugimoto said.