TOKYO \u2014 Ill-fated investments in nuclear power projects by Toshiba of Japan have already precipitated an embarrassing accounting scandal at the company. Now the company is selling its most valuable business to try to undo the damage.
Toshiba, one of Japan\u2019s oldest and proudest technology conglomerates, said on Friday it would spin off its microchip division. The business makes the information-storing \u201cbrains\u201d inside millions of smartphones, digital cameras and other devices, and it has been the biggest contributor to Toshiba\u2019s profits in recent years.
The move is evidence of Toshiba\u2019s desperation for cash after the punishing nuclear-related losses came to light last month.
In December, Toshiba warned it was preparing to write off \u201cseveral billion U. S. dollars\u201d because of ballooning expenses at its American nuclear subsidiary, Westinghouse. That followed Toshiba\u2019s admission in 2015 that it had inflated its earnings by $1.2 billion over seven years \u2014 a scandal that company investigators attributed in part to nuclear-project managers, who they said had disguised faltering revenues and cost overruns.
Toshiba is expected to detail the extent of its write-downs next month. Analysts have suggested they could amount to $4 billion to $7 billion, enough to put Toshiba\u2019s future at risk. Banks have indicated they will keep lending money so the company can pay its bills, but without that lifeline, Toshiba, a 140-year-old business, could collapse.
Toshiba said it had not yet decided what form the semiconductor spinoff would take, or how much of the business it would sell to outsiders. But there is not much time to figure it out; the company said it wanted to complete the process by March 31, the end of its fiscal year.
Analysts estimate the semiconductor business could be worth between 1.5 trillion and 2 trillion yen, or $13 billion to $17 billion, if Toshiba sold all of it. One option would be to sell shares to the public, though a private sale to another technology company would be quicker and easier to arrange, particularly if Toshiba chose to keep part of the company.
Damian Thong, an analyst at Macquarie Securities, said bringing in a minority investor was \u201cclearly the default option\u201d for Toshiba, which is eager to stay in the semiconductor business.
\u201cUndermining that core business would be anathema in Japan, not just for Toshiba, but for the government and the whole technology ecosystem,\u201d he said. \u201cIt needs to sell just enough to give creditors peace of mind, but not enough that it loses control.\u201d
Some see broader national interests at stake.
Getting out of semiconductors entirely would not just deprive Toshiba of a crucial future revenue stream. If a foreign buyer swooped in, it would also take one of Japan\u2019s few remaining semiconductor producers out of domestic hands. The business\u2019s most successful technology, NAND flash memory, was developed by Toshiba decades ago.
One public declaration of interest in Toshiba has come from Canon, the Japanese camera company, which uses Toshiba\u2019s chips in its products and bought a medical device producer Toshiba spun off in 2015.
Canon\u2019s chairman, Fujio Mitarai, is a former head of Keidanren, the lobbying group representing Japan\u2019s largest corporations, including Toshiba. He said last week that the semiconductor business was a valuable asset for Japan and \u201cmust be protected\u201d and that Canon \u201cwould positively consider\u201d investing.
Other potential buyers include Western Digital, the American semiconductor company, which works with Toshiba in some areas; Tokyo Electron, a Japanese company that produces equipment for semiconductor factories; and Foxconn of Taiwan, the contract manufacturer that recently took over Sharp, another ailing Japanese technology brand.
Terry Gou, Foxconn\u2019s billionaire founder, said in an interview with Toyo Keizai, a Japanese business weekly, that he was interested in purchasing assets sold off by Toshiba, potentially including the semiconductor operation.<\/p>\n