The success or failure of Toshiba reconstruction in China? Semiconductor memory service is the key
2018-04-09 Tags: storage semiconductor source: World Wide Web.
Japan Economic News reported in April 9th that Toshiba still faces the risk of selling semiconductor memory business, and its new business system is sailing. The sale of semiconductor memory business as a prerequisite for business reconstruction is not completed before the end of March, but it still remains unchanged as of April 3rd. This is due to the failure of the Chinese government's anti-monopoly review. If the price of 2 trillion yen in the sale of a business long, may have an impact on Toshiba's financial strategy.

In September 2017, Toshiba and Bain Capital signed the sale agreement of Toshiba memory of memory subsidiary. The premise of the sale is through the antitrust review of all countries.

The success or failure depends on the Chinese government

The review of the US and Japan has ended successfully, but the Chinese government's review, which was regarded as the biggest obstacle, was launched in December 2017. In general, the examination time for 4 months, was scheduled to be completed at the end of March the sale target is worrying at the time. In fact, at the end of March did not pass the review.

The Chinese government, with the target of selling more than a certain number of products in the global and Chinese markets, carries out antitrust censorship on the occasion of the merger and transfer of business rights. China set the semiconductor industry as a policy industry and around the sale of Toshiba memory. At that time, many viewpoints pointed out that the review would be long-term.

If the sale has been stalemate, Toshiba and Toshiba's planned investment in memory may be forced to adjust.

Toshiba is the main memory of Yokkaichi plant (located in Mie City Yokkaichi) the construction of the new plant. It also plans to build a new factory in the north of Iwate county and start building factories in the year. A senior executive at Toshiba said, "we will not be able to bear the risk of huge investment in the future", which is one of the reasons for the sale of memory business.

Bain Capital and other companies are making plans to invest capital after acquiring the memory business. The more the transaction is postponed, the more likely the burden of Toshiba will increase. In the context of huge investment launched by Samsung Electronics, if the investment is slow, Toshiba memory's business value is likely to be affected.

According to the transfer agreement between Toshiba and Bain Capital, after April, Toshiba will get the right to terminate the contract under certain conditions. Bain will also have the right to release the contract in July. If the transaction is long, the need for shareholders trend objections to the deal more attention.

In an interview on April 1st, Chatani Choaki, President and CEO of Toshiba (CEO), said in an interview on the 3 day, "strive to complete the sale as soon as possible," and also say "it is not a bad thing to have a business (such as memory)."

Toshiba shareholders capital at the end of March for 460 billion yen, shareholders'equity ratio is 11%. However, Toshiba at the end of December 2017 due to bank borrowings bear interest bearing liabilities 1 trillion and 100 billion yen.

The main trading banks have been urging Toshiba to sell memory business in order to ensure the recovery of loans and credit lines. If Toshiba gets 2 trillion yen in sales, it plans to use it to increase investment and repay bank loans. If the stagnation of trading procedures is prolonged, it may have an impact on financial strategy.

Lose the main Qian Shu

Toshiba is scheduled to hold regular shareholders' meeting in late June. In order to suppress the part of shareholders to oppose the sale of sound diffusion, hope to complete the sale before the end of June.

But even after the sale is completed, Toshiba's reconstruction is also faced with many problems due to the loss of Qian Shu's memory business.

Toshiba still can't find other businesses like the same memory that has a profit of over 100 billion yen in the whole year. The social infrastructure businesses such as elevators and railways, which are positioned as "new Toshiba", are also facing the saturation of the domestic market.

And in the overseas, new projects are growing weak because of the trend of renewable energy such as solar and wind power, such as the Toshiba's strong gas turbine. Che Gu also said, "we need to strengthen basic management capabilities".

In addition, corporate governance reform is also a topic of management crisis. The nomination committee of management is composed of only independent directors in principle. In November 2017, Toshiba reduced its executive director from 23 to 15, and streamlined the operation system.

The 2015 Toshiba financial fraud scandal was exposed. Since then, the internal management system has been improved, but a sun company exposed the illegal cost in December 2017. To promote business restructuring, we need to ensure transparent corporate culture reform.