Toshiba has made the official announcement of its plans to sell some of its flash memory business to Western Digital. The exact details are yet to be determined, but we do know that this will include its SSD business of the Storage & Electronic Device Solutions Division.
You may not be aware that Toshiba originally invented NAND flash memory in the 1980s but the company is now giving “full and careful” consideration regarding which assets the company will transfer when the company splits in an effort to “not interfere with the operation” of its memory business that remains.
Toshiba chief executive Satoshi Tsunakawa explained, at a news conference on Friday, “We had been thinking of splitting off semiconductors to beef up our finances, and the recent nuclear write-down risk accelerated the discussion.”
Western Digital, of course, makes hard drives and flash memory devices so Toshiba chose to spin off its memory business in partnership with WD to grow together.
Executives had described selling the memory-chip unit as a last resort, but it became hard to avoid because the semiconductor business requires a steady flow of large capital investment.
Now, it is also important to note that the company’s solvency and fundraising ability are currently in doubt because of a $1.9 billion accounting scandal as well as a massive loss that was related to the purchase of a nuclear power plant. Indeed, Toshiba announced that its share price had fallen a cautionary 13 percent after reports indicated that the nuclear power plant business lost $4.4 billion.
DRAMeXchange research director, Sean Yang, comments accordingly, “Its financial problems were a major drag on the growth of its memory business.”
Toshiba’s Mr. Tsunakawa has also indicated that he intends to sell absolutely no more than 19.9% of the company’s semiconductor unit in order to prevent a challenge to Toshiba’s control of the business, adding too that the company does not intend to choose rival chip makers to be partners.
Finally, IHS analyst Satoru Oyama notes, “No one would believe Toshiba would sell just that much and be done. The business needs to keep raising cash to stay relevant.”
He goes on to say, “Toshiba’s memory-chip technology is lagging behind Samsung’s, but it’s still valuable, so getting a peek at its production and development know-how would be valuable [for any strategic buyer].”