Ailing Toshiba weighs spinoff of mainstay memory chip business in bid to raise funds


Toshiba Corp. is considering spinning off its mainstay flash memory chip business as a separate company to allow it to raise funds on its own, sources have said.

The move, aimed at strengthening one of its core operations, comes as the scandal-tainted industrial conglomerate is drawing up broad restructuring plans in the wake of an accounting scandal that exposed poorly performing divisions.

One option under consideration is to list the new entity, which would likely be established as a Toshiba subsidiary and take over the operation at the Yokkaichi plant in Mie Prefecture, the sources said Thursday. The Yokkaichi factory is jointly operated with U.S. semiconductor maker SanDisk Corp.

The aim would be to enable it to raise its own funds for new product development to remain competitive in the global market. Toshiba has gained a competitive edge in the market for NAND flash memory, used in smartphones, tablet devices and other products, but has faced fierce competition with foreign rivals, including Samsung Electronics Co.

Toshiba is expected to announce on Monday a restructuring plan for its unprofitable businesses, including those that make televisions, personal computers and white goods, which will involve several thousand job cuts.

In fiscal 2014, Toshiba’s semiconductor division accounted for over 25 percent, or ¥1.77 trillion ($14.4 billion), of total group revenue. NAND flash memory alone earned ¥860.6 billion.

As part of broader streamlining of its semiconductor production, Toshiba is also considering producing system LSI chips for other companies at its plants in Oita and Iwate prefectures, the sources said.

Toshiba has already reached a deal to sell its production line for image sensors to Sony Corp. for ¥19 billion, and has decided to withdraw from the white light-emitting diode business.

Toshiba’s improper accounting practices criticized by an independent investigation panel as “systematic” have led to a series of downward revisions to past financial statements totaling ¥224.8 billion on a pretax basis from April 2008 to December 2014.