TOKYO -- Toshiba is considering spinning off semiconductor operations and selling a partial stake to Western Digital as it tries to cope with a massive impairment loss in its U.S. nuclear power unit.
The new chip business company will be created as early as the first half of this year. Besides global hard-drive leader Western Digital of the U.S., investment funds are also showing interest, according to sources familiar with the matter.
Which suitor will win out remains unclear in light of antitrust and other considerations. But Toshiba will likely sell a roughly 20% interest for between 200 billion yen and 300 billion yen ($1.77 billion to $2.65 billion) while retaining a majority stake and keeping the new company in group earnings. The unit could consider stock-market listing in the future.
The arrangement would provide Toshiba with short-term funds in the form of proceeds from the stake sale, as well as make it easier for the business to get bank loans and other funding for capital investment and research and development. This would facilitate growth driven by flash memory chips, eventually lifting Toshiba's capital.
Toshiba and Western Digital operate a key flash memory plant together in the Mie Prefecture city of Yokkaichi.
Memory chips accounted for the majority of the 1.57 trillion yen in sales of Toshiba's semiconductor operations in fiscal 2015.
Ahead of the mid-February release of April-December results, Toshiba is scrambling to finalize new restructuring steps and a necessary write-down on the U.S. nuclear business. It hopes to retain financial support from lenders by presenting the spinoff and other reform plans.