Toshiba has provided an update on its reorganization plan disclosed in November 2021, announcing its intention to separate the company into two standalone companies - Toshiba Infrastructure Service and Toshiba Device.
Toshiba Infrastructure Service will comprise Toshiba's Energy Systems & Solutions, Infrastructure Systems & Solutions, Digital Solutions, and Battery businesses, in addition to Toshiba's ownership stake in Kioxia. Its products and services will include power generation, transmission and distribution, renewable energy, energy management, systems solutions for public infrastructure, railways and industry, and IT solutions for government agencies and private companies.
Toshiba Infrastructure Service is expected to generate net sales of JPY1.52 trillion (US$13.2 billion) in fiscal year 2021 and is projected to grow at a compound annual growth rate (CAGR) of 5.3%, reaching JPY1.87 trillion by fiscal 2025. It also expects to improve operating income margins from 3.6% to 6.4% over the same period.
Furthermore, Toshiba will immediately monetize its shares in Kioxia to the greatest possible extent, and will return the net proceeds in full to shareholders, within the limits stipulated by applicable laws and regulations. The company plans to put forward a shareholder resolution outlining its plans for Kioxia at the upcoming extraordinary general meeting of shareholders, which will take place in March 2022.
Toshiba Device will consist of Toshiba's Electronic Devices & Storage Solutions business. Its products will include power semiconductors (silicon, compounds), optical semiconductors, analog integrated circuits, high-capacity hard disk drives for data centers (nearline HDDs) and semiconductor manufacturing equipment.
Toshiba Device is expected to generate net sales of JPY860 billion in fiscal 2021 and is projected - excluding the memory resale portion - to grow at a CAGR of 4.1%, reaching JPY1.01 trillion by fiscal 2025. It expects operating income margins to improve from 6.4% to 7.9% over the same period.
"The refined strategic reorganization plan creates two distinctive companies that are well-positioned to take advantage of their unique strengths and business cycles," said Satoshi Tsunakawa, interim chairperson, president and CEO of Toshiba. "We will be able to deliver these benefits while providing a clearer path to completion, reducing the associated costs, maintaining tax-free status and keeping to our stated timeframe of completing the spin-off in the second half of FY2023."
Toshiba Device will be spun-off from Toshiba, and company stock of Toshiba Device will be distributed to Toshiba's shareholders at the time of the spin-off record date, according to the Japan-based vendor. The reorganization remains on track to be completed in the second half of fiscal 2023, subject to the completion of necessary procedures, including the approval from Toshiba's general shareholder meeting and fulfillment of all review requirements from relevant authorities.
Earlier this month (February 2022), Toshiba unveiled plans to construct a new 300mm wafer fab for power semiconductors at its main discrete semiconductor production base in Japan's Ishikawa prefecture. Construction will take place in two phases, with the production start of Phase 1 scheduled in fiscal 2024. When Phase 1 reaches full capacity, Toshiba's power semiconductor production capacity will be 2.5 times that of fiscal 2021.
