Toshiba Considers Cancelling Sale of Semiconductor Business

Toshiba Corp. is said to be considering scrapping its plan to sell the memory chip unit.

According to semiconductor industry sources on May 13, Toshiba is seriously considering the retraction of its sales plan as Chinese regulators indefinitely postponed their antitrust review of the deal.

China’s recent move was a decisive cause of Toshiba considering retracting its sales plan. The deal was initially scheduled to close by March 31. However, the date was pushed back to May 1, as China’s antitrust authority slowed down the review. Nevertheless, it is still uncertain whether the deal can be approved, though it is reviewed by China by the end of this month. Toshiba will have the right to discontinue the deal starting from May. In short, Toshiba will be able to decide on whether to proceed the deal, going back to the starting point.

Toshiba is now in a completely different situation from September last year when the company decided to sell its memory business. Until just recently, Toshiba was about to fall into a state of capital impairment and be delisted due to a failure in nuclear power business in the United States. Accordingly, the company tried to inject capital in a hurry by selling its cash cow memory chip unit.

Toshiba saw its financial conditions improve after successfully increasing US$5 billion (5.34 trillion won) of capital by issuing new stocks at the end of last year. Then, shareholders started opposing the sale of memory chip business. Seiji Inagaki, president of Dai-ichi Life Holdings Inc., a shareholder and creditor of Toshiba, said, “I don’t want to sell Toshiba’s semiconductor business.” Some say that Toshiba will be able to make more profits when it lists the memory chip unit instead of selling it because the sales amount offered by the US-Korea-Japan consortium is too low. The Wall Street Journal reported a day ago that Toshiba almost gave up the sale of its semiconductor business division.

Meanwhile, Toshiba agreed to sell its memory chip unit to the consortium consisting of US’ Bain Capital Private Equity and Apple and South Korean chipmaker SK Hynix and the Innovation Network Corp. of Japan (INCJ) for 2 trillion yen (US$18.3 billion or 19.53 trillion won) in September last year. However, the deal is about to fall through as Chinese regulators stalled approval, the final step before the completion of the sale.