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Toshiba sells off a stake in its memory business to WD

Lucas Mearian | Jan. 30, 2017
Toshiba hopes by divesting a portion of its memory business it can gain the financial footing to further expand operations.

Toshiba today officially announced it will sell a yet-undisclosed portion of its flash memory business, including the SSD business of the Storage & Electronic Device Solutions Division, to Western Digital (WD).

Toshiba, which invented NAND flash memory in the early 1980s, said it is giving "full and careful" consideration about which assets will be transferred in the company split, so as to "not interfere with the operation" of the memory business after the transaction is finalized.

It decided to spin off its memory business to help that business grow through investments that WD, a maker of hard drives and flash memory devices, can make, the company stated.

Toshiba BiCS 3D NAND flash 
Based on a vertical stacking or 3D technology that Toshiba calls BiCS (Bit Cost Scaling), the company's NAND flash memory stores two bits of data per transistor, meaning it's a multi-level cell (MLC) flash chip. It can store 128Gbits (16GB) per chip. Credit: Toshiba

Toshiba and WD already co-operate a memory fabrication plant, the Fab 2 manufacturing facility located in Yokkaichi, Japan.

Toshiba initially announced last week it was exploring spinning off its memory business. A report in the Nikkei's Asian Review stated that Toshiba had been considering spinning off its semiconductor operations and selling a partial stake to WD, "as it tries to cope with a massive impairment loss in its U.S. nuclear power unit."

Toshiba's solvency and fundraising ability are presently in doubt because of a $1.9 billion accounting scandal and a huge loss related to the nuclear plant purchase. Last week, Toshiba announced its share price had tumbled 13% after reports that its nuclear power business had lost $4.4 billion.

"Its financial problems were a major drag on the growth of its memory business," Sean Yang, research director of DRAMeXchange, said.

The Nikkei Asian Review reported that Toshiba may sell a 20% stake in the memory business for between $1.77 billion and $2.65 billion, "while retaining a majority stake and keeping the new company in group earnings."

"Toshiba has positioned the memory business as a focus business where 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," Toshiba said in a shareholder memo. "Splitting off the memory business into a single business entity will afford it greater flexibility in rapid decision-making and enhance financing options, which will lead to further growth of the business and maximize the corporate value of Toshiba Group."

Toshiba plans to hold a special shareholders' meeting to vote on the intended split in March, and if all goes well, the company plans to finalize the deal with WD on March 31, it said.

 

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