SAN FRANCISCO—A crisis over Toshiba Corp.’s financial stability has gone from bad to worse, leading to the Japanese company to consider more aggressive actions such as selling a larger portion of its semiconductor business than previously planned to offset losses in its nuclear power business.
Toshiba said Tuesday (Feb. 14) it would explore other ways to raise capital after it announced a write down of $6.3 billion related to its nuclear business, including raising the possibility of selling a majority stake in its chip business. Previously Toshiba had said it would sell less than 20 percent of the semiconductor business.
Toshiba had already acknowledged that it might be forced to take a write down on its nuclear power business that could run into the billions of dollars. But things went from bad to worse Tuesday (Feb. 14) when the Japanese conglomerate announced it the write down and said it would stop building nuclear power plants altogether. Toshiba also delayed its earnings report by one month and announced the resignation of its chairman, Shigenori Shiga.
Toshiba also announced it would seek to sell all or part of Westinghouse Electric Co., the U.S. subsidiary nuclear power plant business that it acquired a decade ago.
A handful of companies—including rival chip vendors SK Hynix Inc. and Micron Technology Inc.—reportedly submitted bids to acquire part of Toshiba’s chip business by Feb. 3. It’s not known how Tuesday’s announcement might impact those offers.
Toshiba had reportedly been thought to favor selling the stake in its chip business to a private equity firm such as U.S.-based Bain Capital, which also reportedly submitted a bid. Hon Hai Precision Industry Co., the giant Taiwanese electronics contract manufacturer that operates under the trade name Foxconn, and U.S. disk drive vendor Western Digital Corp. were also reportedly among the bidders.
A separate report last week by the Nikkei news service said Toshiba favored selling smaller slices of its chip business to multiple firms rather than allocating the entire sub-20 percent stake to a single investor.
Shigenori Shiga, Toshiba
But with the write down amoujnt higher than most had feared, analysts believe that Toshiba’s flexibility has narrowed. Some analysts believe that the company may be forced to file for bankruptcy.
Greg Wong, founder and principal analyst at memory chip market research firm Forward Insights, said Toshiba has a few options for helping cover the loss of shareholder equity due to the nuclear business write down, including selling off the chip business lock, stock and barrel.
Wong and other analysts agree that the impact to memory chip market in the event that Toshiba sells a majority stake in its business is highly dependent on the acquirer.