Japan looks to mobilize public money for Toshiba turnaround
State-backed lender eyes stake in chip unit to protect tech
TOKYO -- The Japanese government is weighing options for using state financing arms to support Toshiba's plan to spin off its memory chip business amid calls to keep the company's technology out of foreign hands.
Toshiba plans to sell off at least half of Toshiba Memory, for which the first round of bidding is slated to end March 29. About 10 companies have expressed interest including U.S. hard drive maker Western Digital, which works with Toshiba on NAND flash memory production, as well as rivals from mainland China, South Korea and Taiwan.
Some in Japanese industry -- such as Sadayuki Sakakibara, chairman of the Keidanren business lobby -- have voiced concern about technology and talent flowing out of the country.
Chip technology "relates to such matters as national security, so we will keep that in mind as we choose a partner," Toshiba President Satoshi Tsunakawa said Tuesday.
Loss of vital technology is also a concern for some in the government, with a senior Ministry of Economy, Trade and Industry official noting that "a sale to the Chinese or Taiwanese would be especially tough" from that perspective. Tokyo is exploring ways to mobilize government-backed financing to protect against this risk.
The Development Bank of Japan is considering creating a fund to invest in Toshiba Memory. The lender is in talks to enlist the public-private Innovation Network Corp. of Japan as a co-investor. A proposal has been floated to solicit investment from Toshiba's business partners as well.
Holding 34% of voting rights in the memory unit would confer veto power over major management decisions, providing a check on potential technology outflows.
The industry ministry also is weighing aid for Toshiba, possibly via the INCJ, which it oversees. The ministry sees a need to have a say in Toshiba Memory's management even if the company is acquired by a foreign buyer, in order to retain critical chip technology and domestic jobs.
The memory business sale is expected to fetch 1.5 trillion yen to 2 trillion yen ($13.2 billion to $17.6 billion) and aims to plug the hole left in Toshiba's finances by a massive loss on overseas nuclear operations that the group has warned of for the fiscal year ending March 31.