After a massive capex splurge on its semiconductor division over the last three years, Toshiba is radically cutting back its chip investments over the coming year.
Toshiba has been spending an average of Yen 329bn ($3.3bn) a year for the last three years on capital expenditure for semiconductor manufacturing.
The aim of this huge expenditure was to overtake Samsung’s market share in NAND flash. But the effort failed to make any impact on the respective 40% and 28% market shares held by the two companies.
Now Toshiba is cutting back its annual investment in semiconductor capex to less than a third of the previous level. Capital spending for this fiscal year (to end March 31st) will be Yen 90bn ($900m).
Whether this will affect Toshiba’s future ability to keep on the cutting edge of semiconductor technology is problematical. There has been speculation in Japan that the semiconductor division may be spun off as a separate unit.
Toshiba Corporation, with Yen 1.8trn ($18bn) of debt to service, will seek to raise about $5bn from issuing new shares and selling bonds.
In the 2008 fiscal year (to March 31st 2009), Toshiba’s semiconductor division lost $2.8bn. Overall the Toshiba Corporation had a $3.47bn net loss, and a $2.53bn operating loss.
Next month a new CEO of Toshiba Corporation, Norio Sasaki, takes over. Sasaki comes from the heavy electrical engineering side of the Toshiba business and is expected to focus the company on broadcasting equipment and power generation equipment, particularly nuclear power stations.