Toshiba to offload memory chip unit

The firm will gradually unwind its stake in Kioxia Holdings as it looks to escape the volatile semiconductor market

Toshiba is planning to sell its 40.2% stake in flash memory chip manufacturer Kioxia Holdings, as well as return a majority of the post-tax proceeds to its shareholders, according to an announcement made today.

The Japanese tech giant wants to escape the volatility of the semiconductor market by getting rid of Kioxia, formerly known as Toshiba Memory. The company's announcement caused shares in Toshiba to jump by 5%.

The company did not provide any further details on the planned sale but sources familiar with the matter said that the tech giant is hoping to gradually unwind its stake in Kioxia Holdings when it lists shares on the Tokyo exchange in October.

Kioxia, which is the world’s second-largest flash memory chip manufacturer, is predicted to generate an impressive return for Toshiba due to its significant market value, estimated to be at around $32 billion.

Toshiba sold its former flash memory chip unit, then known as Toshiba Memory, to Bain Capital for $18 billion in 2018. As part of the deal, Toshiba purchased a 40.2% stake in the chip manufacturer.

The semiconductor industry had increased in volatility during the coronavirus pandemic, with its economic effects causing the worldwide revenue forecasts to decline by 0.9% (roughly £44 billion) during 2020. Previous forecasts suggested the market would grow by 12.5% this year.

“The wide spread of COVID-19 across the world and the resulting strong actions by governments to contain the spread will have a far more severe impact on demand than initially predicted,” said Gartner’s research practice VP Richard Gordon. 

“This year’s forecast could have been worse, but growth in memory could prevent a steep decline.”

The memory market, which will comprise roughly 30% of all semiconductor sales in 2020, is forecast to reach $124.7 billion (£100.4 billion). The nonmemory revenue market, which is set to decline, is expected to reach $290.6 billion (£234 billion). 

Toshiba’s announcement comes days after Yoshimitsu Kobayashi decided to resign as the company’s board chairman. He is to be replaced by Osamu Nagayama, who is currently an honorary chairman at Chugai Pharmaceutical.

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