Report: Toshiba Urged To Pick Another Chip Unit Buyer

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Some of Toshiba's investors are pressuring the Tokyo, Japan-based tech giant to pick another buyer for its chip division or consider alternative ways of raising cash, sources close to the company said on Friday. The firm has been struggling to find a buyer for its flagship unit in recent months, with its long-term joint venture partner Western Digital even pushing for arbitration in the case after feeling left out of the proceedings. The search for a party interested in acquiring its chipmaking subsidiary has been going on for half a year now, with the company eventually settling for Bain Capital, a Boston, Massachusetts-based global investment firm backed by the Japanese government.

Albeit a definitive agreement with Bain Capital has not been reached yet, industry watchers and opponents of the move are already pointing out some potentially major issues in the deal, including recent rumors that South Korean semiconductor company SK Hynix is planning to acquire equity in the unit that Toshiba is seeking to sell for $18 billion. The Japanse company previously dismissed such a scenario, but reports of it happening anyway have prompted politicians and analysts to speculate about antitrust issues related to the transaction. With Toshiba's second likeliest suitor currently being involved in a legal battle with the company, the firm's time to liquidate its assets before the end of its current fiscal year and balance its problematic books is running low. Due to the losses incurred by its U.S. nuclear division Westinghouse that filed for bankruptcy this May, Toshiba found itself in a precarious position, having to cover for its losses without being able to turn to traditional loans due to sanctions imposed on it following a major accounting scandal in 2015.

The company's chipmaking unit is one of its most profitable ones, hence being significantly easier to liquidate than many of its other assets. According to numerous reports, suitors interested in acquiring the unit ranged from everyone like SK Hynix and Western Digital to Broadcom and even Google, though completing the transaction itself proved to be a troublesome affair. With Toshiba now facing the risk of its shares being delisted from Tokyo's stock market, an update on its endeavors to prevent that scenario should follow shortly.

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