Toshiba to split into three companies

Nikkei Chinese reported on November 9 that Toshiba is considering splitting the company into three parts according to its main business. Toshiba will divide the business of itself and its subsidiaries into infrastructure, devices and semiconductor memory, reorganize into three companies, and list them separately, striving to achieve it in two years. This is the first case of a large Japanese company being completely split and listed, which will become a historic turning point in Japan's industrial sector.

Image source: Nikkei Chinese website

Toshiba's subsidiaries are engaged in a variety of businesses, including power generation equipment, transportation systems, elevators, hard disk drives (HDDs), and semiconductors. Of the sales of 3.543 trillion yen in fiscal 2020 (ending March 2021), six divisions achieved sales of 200 billion to 800 billion yen each.

 Image source: Nikkei Chinese website

The move is also seen as a way to ease pressure from activist shareholders, who now make up a large portion of Toshiba's investor base. Critics in the stock market say Toshiba's diversified operations are inefficient compared with specialized companies in various fields. After the split, each company with different businesses can focus on its own operations and is expected to achieve higher revenue.

Toshiba will divide its businesses other than semiconductor memory into "infrastructure" such as power generation equipment and "device" businesses such as hard disks. Semiconductor memory is envisioned to become a holding company of Kioxia Holdings, which holds about 40% of the capital. It is also possible that semiconductors will be included in devices, forming two companies.

In addition to the dissolution, the news about Toshiba's withdrawal from China also dominated the screen. In September this year, Toshiba Dalian Co., Ltd. was officially closed. This was another major withdrawal after Toshiba closed its TV factory in Dalian at the end of 2013. At that time, there were also rumors in the media that Toshiba's 33 factories and R&D institutions in 24 cities in China would be closed at the end of December. On November 8, Yoichi Miyazaki, chairman and president of Toshiba (China) Co., Ltd., said in an interview with the media that the factory had completed its mission and Toshiba was not withdrawing from the Chinese market.

As of the end of March, Toshiba had a total of 296 subsidiaries and 117,300 employees, and splitting it into three companies requires tedious work.

Toshiba said that splitting the company is indeed one of the strategic options under consideration, hoping to increase shareholder value, but no final decision has been made. Toshiba's stock price rose by more than 2% in early trading today.