Toshiba now plans to sell a majority stake in their semiconductor business

Toshiba has confirmed that they will spin off their NAND production division into a separate company, creating a dedicated NAND producer that will allow Toshiba to refinance itself through external investment. Originally Toshiba announced that they planned on selling a 20% stake in the company, though it now looks like the company will be selling a majority stake of around 60% in order to pay their existing debts. 

At this time it is unknown when Toshiba will create their new external NAND production company, though it is likely that it will see investment from Western Digital, who recently acquired Sandisk. Toshiba has recently been a major partner of Sandisk, who co-created their BiCS3 64-layer 3D NAND Flash, which is set to be a major earner for both companies moving forward.

This move will be a very dangerous move for Toshiba moving forward as their internal NAND production allows them to create a wide-range of storage products in-house, allowing them to sell the products with high margins. Only holding a 40% share in their most profitable business the companies will no doubt have a significant impact on Toshiba’s future earnings. 

 

 

Western Digital is in great financial heath at the moment and has expressed a lot of interest in furthering its stake in the NAND flash market, making it likely that the company would invest heavily in Toshiba’s NAND Semiconductor spin-off. This was before the announcement that Toshiba would be selling a majority stake, so it is hard to know if Western Digital even has the funds on hand to buy such a large stake in the company. 

One other factor to consider is the regulatory approval that would be required for Western Digital to invest heavily in Toshiba’s NAND production, which could take a considerable amount of time. With the immediacy of Toshiba’s financial situation, it is likely that the company is considering other options for external investment, like the Chinese Tsinghua group. 

  

  

Right now the future of Toshiba is unclear, with their enormous debts to pay now forcing the company to sell its most profitable business, in turn harming the companies future earning potential.  

 

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