What next for Toshiba?
When Westinghouse, Toshiba’s United States-based nuclear unit, filed for bankruptcy late last month, it set off a chain reaction of events that have plunged Toshiba’s very existence into doubt.
Now, less than a fortnight on, Toshiba Corporation has taken the unprecedented step of publishing its delayed financial results without prior approval from the firm’s external auditors.
Back in February, the company had forecast a $3.5 billion loss for the fiscal year. However, the recently released results indicate that Toshiba has in fact posted a loss of $4.8 billion for the period of April-December 2016.
Although the majority of Toshiba’s financial losses stem from issues relating to Westinghouse, the impact has been felt across the entire conglomerate.
In a bid to stay afloat, the company is attempting to sell off some of the most viable parts of its vast portfolio.
The Tokyo-based conglomerate has over 600 different businesses, with interests in everything from light bulbs to elevators, but its most viable – and financially attractive – asset is its semiconductor business, which makes flash-memory chips for use in mobile phones, tablets and other similar devices.
It is believed that Toshiba has valued its semiconductor business at $18 billion but Foxconn, formally known as Hon Hai Precision Industry, has indicated that it may be willing to shell out $27 billion in order to force the Japanese firm to the negotiating table.
Based in Taiwan, Foxconn is the world’s largest contract electronics manufacturer and has a roster of high-profile customers that include Apple, Sony and Microsoft. Despite the potentially high-value bid, Foxconn’s move will face stiff resistance from the Japanese government due to fears that the company will move both manufacturing and crucial intellectual property out of the country.
Another leading name believed to be interesting in acquiring Toshiba’s semiconductor business is SK Hynix. An unnamed source, quoted by Bloomberg, has said that officials at the South Korean firm are looking into the feasibility of launching a joint bid with a Japanese-based investment group to secure preferential treatment. However, there are anti-trust fears over this bid, as well as the worry that Hynix may be able to buy its partners out to gain full control in the future.
Whilst the future of Toshiba’s semiconductor arm is in the air, the 142-year-old conglomerate has sought additional financial support from financial centres, even offering real estate as collateral.