Business & Economics

Toshiba’s Financial Crisis Drives It To Sell Microchip Business

Toshiba has been one of Japan’s proudest and oldest group of technology conglomerates. In a move that left many onlookers shocked despite several tell-tale signs over the last year, the technology giant recently said that it will be spinning off its microchip division. This part of the techno-business is responsible for the storage of information inside millions upon millions of devices such as digital cameras and smartphones. Understandably, it has also been the biggest financier of Toshiba’s profits for several years now.

Unfortunately, because of several ill-fated investments in nuclear power projects and an embarrassing accounting scandal, the company’s image has taken a hit and it doesn’t seem to be recovering from the damage any time soon. While the move is pressing evidence of Toshiba’s desperate need for cash after nuclear project related losses hit the spotlights recently, the company will not be taking the entirety of the fall. Shigenori Shiga, the company’s chairman who is also in charge of the nuclear power sector, has agreed to take responsibility for the losses by resigning his post.

During the final months of 2016, Toshiba was warned against writing off billions of U.S. dollars for the ever-expanding expenses of Westinghouse, its American nuclear subsidiary. This tie in with Toshiba’s admission back in 2015 stating that its earnings had inflated by $1.2 billion which had been disguised to hide cost overruns and failing revenues by its nuclear-project managers.

Toshiba is expected to submit a detailed report regarding the extent of its debts during February, 2017. Financial analysts expect the write-downs to cost from $4 billion to $7 billion, which is more than enough to put the future of the company at risk. Though Toshiba has said there has been no finalized decision on which form the semiconductor spinoff would take, financers believe that by selling the entire semiconductor side, the company could come into around $17 billion, all inclusive.

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