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Toshiba not flogging memory chip stake

by on21 December 2018


Will keep it for now

Toshiba has no immediate plans to sell its 40.2 percent stake in Toshiba Memory according to its CEO.

Some analysts see Toshiba's stake as a concern at a time when overcapacity in NAND memory chips, used in smartphones and data storage servers, has pressured prices and forced companies to give a dull near-term outlook.

But Toshiba CEO Nobuaki Kurumatani said the stake is really useful.

The stake allows Toshiba to account for its former unit in its earnings, without having to further invest in it.

“We’re now in a position to benefit 40 percent of their profits while exempt from investment burdens”, he said.

“I think we have an appropriate balance.”

Toshiba sold the business to a Bain Capital-led consortium that included South Korean rival SK Hynix, Apple, Dell and Seagate Technology, to plug a multi-billion-dollar hole in its balance sheet after an accounting scandal and the collapse of its US nuclear unit.

The company will reassess its plans for its stake in the chip business when Toshiba Memory’s initial public offering (IPO) comes closer, Kurumatani said.

“We still have time to examine the situation with Chinese chipmakers and market conditions”, he said.

The chief of Toshiba Memory had in September reaffirmed the company’s plan to go public in two to three years, saying it had started preliminary work to prepare for an IPO, brushing aside concerns about weak fundamentals.

After a two year boom in the market, oversupply is weighing on NAND flash chip prices amid weak consumer and business demand for phones and computers. NAND flash memory contract prices fell about 10 percent over July-September, according to market research firm TrendForce.

 

Last modified on 21 December 2018
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