Toshiba's Era of Dominance in Electronics Comes to a Close

Toshiba, once a prominent player in the electronics industry, has recently been delisted from the Tokyo Stock Exchange after a long and tumultuous history. The company's downfall began in 2015 when accounting malpractices involving top management were exposed, revealing that Toshiba had overstated its profit by $1.59 billion. Further accounting irregularities were discovered in 2020, alongside allegations of corporate governance issues and the suppression of foreign investors' interests. Toshiba's situation worsened when its US unit, Westinghouse Electric, filed for bankruptcy, leaving the company with over $6 billion in liabilities. To alleviate its financial crisis, Toshiba sold off various businesses, including its mobile phone, medical systems, and white goods divisions. However, it was also forced to put its chip unit, Toshiba Memory, up for sale, impacting its position in the future of technology and innovation. Despite a $5.4 billion cash injection from overseas investors in 2017, activist shareholders gained more influence over the company's direction, leading to prolonged battles and stagnation. In a bid for survival, Toshiba established a committee to explore the possibility of going private. In June 2022, the company received eight buyout proposals and later confirmed its acquisition by a group of Japanese investors led by state-backed Japan Investment Corp (JIC) for $14 billion. The new owners' plans for turning around Toshiba remain unclear, but the outgoing chairman has mentioned a focus on high-margin digital services. Japan Investment Corp has experience in carving out businesses from larger manufacturers, as demonstrated by their successful acquisition of Sony's Vaio laptop business in 2014. However, the stakes are high for Toshiba, considering its significant size and national security implications. The company employs around 106,000 individuals, with certain operations viewed as critical to national security.