Toshiba Semiconductor Business Restructure Attracts Interested LED Chip Business Buyers

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Toshiba is considering to sell its less profitable semiconductor businesses including its System LSI business to concentrate resources in advanced NAND, flash memory, and nuclear power generators and other coal fire equipment, according to a recent Nikkei report.

The report pointed out with the exception of NAND flash operations, Toshiba planned to sell most of its semiconductor business including analog semiconductor chips, LSI, microcontroller units and power control chips. In total, the combined business worth is an estimated 200 billion Japanese Yen (US $1.69 billion).

Toshiba announced in late October 2015 that it was exiting the white LED market, and several financial firms showed interest in acquiring its LED business at the time. The company press release revealed it would be withdrawing from the CMOS sensor and white LED markets, which belongs to its discrete component businesses. In late 2015, the company announced it will exit the white LED market by March 2016 earliest. Industry insiders analyzed Toshiba left the white LED market, due to intensifying market competition and plummeting profits. The company will be focusing its resources on profitable businesses.

The company has initiated the bidding process for its semiconductor businesses, with the Development Bank of Japan among the first to make an offer. The government-backed fund operates a semiconductor joint venture with Seiko Holdings, and other firms are expected to place their bids soon. Toshiba plans to choose a buyer by end of March this year. Depending on the terms of the acquisition deal, Toshiba might retain partial ownership.  

According to the report, NAND flash is Toshiba’s most profitable business, and is ranked second globally close at Samsung’s heels. Toshiba’s restructure will take all the newly acquired finances to expand its NAND flash production capacity in Yokkaichi, a city located in Mie Prefecture in Japan.

According to Money DJ reports, Toshiba’s shares climbed up 5.21% last Friday to 222 Japanese Yen, but overall the company share prices have declined 11.60% since the start of 2016.

Toshiba has been downsizing since its accounting scandal surfaced last year. It has exited the money losing LED business, and sold its CMOS image sensor business to Sony.

 It is estimated the company’s chip business sales will be finalized in March 2016. Toshiba might sell part of its businesses through shares equity. Only by restructuring its business can Toshiba turn around losses to profit.

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