Less than a year in, Toshiba revival plan falls apart
Industrial giant faces long road in regaining trust
TOKYO -- Toshiba had positioned nuclear power and semiconductors as the two drivers of its comeback from a damaging accounting scandal, but it now faces serious business trouble in the former and plans to spin off a chunk of the latter.
At a news conference on Friday, CEO Satoshi Tsunakawa stressed the need to restructure the company's nuclear power business. "We will review, especially in our overseas markets, whether we want contracts that include the construction of nuclear plants or if we want to specialize in making equipment," he said.
The Japanese company began a full-fledged foray abroad on nuclear power in 2006. It acquired U.S.-based Westinghouse Electric to much fanfare, and set an aggressive goal of scoring contracts to build about 40 reactors in China, India and other countries. But the 2011 Fukushima disaster threw a wrench into these plans.
The nuclear power business will be broken off from Toshiba's energy systems segment and report directly to the CEO. The company will increase its involvement in Westinghouse and start an incremental review of its nuclear-related operations as a whole, including the possibility of a spinoff. It has even suggested shrinking the business abroad, such as through a freeze on new projects.
Toshiba is also looking to sell just under 20% of its memory chip business in a planned spinoff. The newly created company would be the world's second-largest producer of NAND flash memory, used in smartphones and other devices. Having outside investors means Toshiba could face uncertainties on future decisions over product development and capital investment.
Toshiba announced an action plan in December 2015 as if to mark the conclusion of its accounting scandal. Last March, it announced that semiconductors and nuclear power would be its two pillars of business. "I want to mark the first step of a new Toshiba," then-CEO Masashi Muromachi said. But its recent troubles had stemmed from nuclear power, which was supposed to help the company get back on track. Toshiba still faces a long road to recovering the trust it has lost.