Cash-strapped Toshiba is set for a massive financial injection after its nuclear unit Westinghouse filed for bankruptcy. Westinghouse has filed for a Chapter 11 protection from its creditors, as its Japanese parent company attempts to recover loses of up to $9.8 billion.
And the decision to file for bankruptcy looks to have sparked a mass sale of shares in the company’s profitable chip business to offset loses from the failed nuclear unit. A consortium led by South Korea’s SK Hynix Inc has reportedly offered to pay more than $9 billion for a majority stake in Toshiba Corp’s memory chip business. Sources say the Korea-Japan alliance is preferred, due to Japanese government’s concerns over tech leaks to rivals, particularly in the US. A consortium of state-funded businesses and Japanese banks had previously been mooted as a possible backer.
SK Hynix is the world’s second-largest DRAM chipmaker and the fifth most profitable firm in terms of NAND sales. Toshiba is currently the second-largest NAND chipmaker, and a potential merger would see SK Hynix-Toshiba surpass Samsung Electronics as the largest NAND manufacturer.
Taiwan’s Hon Hai Group and TSMC are also said to be interested in investing in Toshiba’s chip business. However, SK Hynix remains in pole position and an investment decision is expected by the end of the week, after the firm carries out an in-depth inspection of Toshiba’s business operations.
The multinational conglomerate first called in bankruptcy lawyers earlier in the month after missing an earnings deadline for a second time. They have now confirmed loses of $9.8 billion for its nuclear unit Westinghouse. This is largely down to an ill-fated purchase of a power plant construction firm in the US that has been haemorrhaging money. Filing for bankruptcy now allows the company the opportunity to renegotiate that contract or break it off completely.