According to Reuters, Toshiba might be considering selling a minority stake in its chip business, possibly to Western Digital to compete against Samsung.
Amidst reports of a $6 billion writedown, shares in the Japanese multinational conglomerate dropped 16 percent. That means a market value of merely $9 billion. Reuters cites people who are familiar with the matter, who claim that the company “urgently seeks funding to avoid being crippled by an upcoming multibillion-dollar writedown.” And one of the very few possible solutions is splitting off its NAND flash memory chip business and selling a stake.
Toshiba is the world’s second largest NAND flash memory producer – the first being Samsung, of course – and it is said that the size of the stake planned to be sold could be anywhere from 20 percent to 30 percent. Now, the question is who will Toshiba sell it to?
One potential buyer is Western Digital Corp, an American hard disk drive manufacturer. Although it’s unclear whether antitrust laws will allow this buyout, and it’s unclear just how much will be merged with Western Digital, Doh Hyun-woo, an analyst at Mirae Asset Daewoo Securities predicts that the combined shares could be significant:
If the spin-off is confirmed, the financial condition of Toshiba’s chip unit will be improved. This will allow the firm to secure more capacity in development and thus narrow the technology gap with Samsung… If Toshiba is merged with Western Digital, their combined shares will exceed that of Samsung Electronics.
However, according to a senior Toshiba executive, who remains anonymous, the merge may not be the most realistic and practical option since the process of going through an antitrust review would be too time-consuming.
The merge may not be the most realistic and practical option since the process of going through an antitrust review would be too time-consuming.
Toshiba has a solid history of 2D NAND chip production, but with 3D NAND, it entered the market too late and lost its leadership to Samsung. Currently, Samsung dominates the 3D NAND market with 36.6 percent whereas Toshiba’s share is 19.8 percent.