Selling the breadwinner memory business, now Kioxia (2017)

Selling off its earning power to survive

At the centre of this decision lies a paradox: to keep its listing, Toshiba had to turn its single most profitable business into cash. The NAND flash memory that Toshiba was the first in the world to create was earning the greater part of the group’s profit even in the depths of the crisis. That business it let go — not sold high in a boom, but surrendered while being chased by the failure of its nuclear business. The weight of this sale lies in the fact that Toshiba handed over its very power to earn in order to buy survival. Even the price of some ¥2 trillion may have been close to the ceiling a seller pressed for time could draw out.

That said, Toshiba did not part with the business entirely. By keeping 40.2% of the voting rights, it left room for a later rise in Kioxia’s corporate value to become an unrealized gain that could support Toshiba’s rebuilding. Whether the prized asset it had ostensibly let go would, in altered form, come to prop it up again rested on the memory market and Kioxia’s growth. This judgement — filling the hole of the insolvency brought on by its tilt toward nuclear power with the sale of memory — was also a moment in which Toshiba, the full-line electrical maker, was made to ask itself anew what it would keep and what it would give up. That question would drag on all the way to the 2023 delisting.