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The Magic of Toshiba Memory
Toshiba Memory is independent. The company wants to use the new freedom to be at the forefront of technology. Will everything be alright?
According to the famous words of Hermann Hesse, each beginning bears a special magic. CEO Yasuo Naruke does not want to rely on magic, but on technology.
He believes that he is on the right track with the investments he has made in 3D NAND memory technology in recent years. Now he even wants to expand the research department by no less than 500 new jobs. With technology at its core, the financial strength of Bain at its back and the agility of being an independent chip company, he believes it has all the prerequisites to be able to advance to the top among NAND manufacturers. A new company, new success, and new on the stock exchange in the foreseeable future - everything alright?
Toshiba Memory is not completely new, but the procedure through which the sale was made. This procedure had no magic: in an old fashion and under the impression of Sharp's sale to Foxconn, the Japanese politicians wanted to avoid another loss of face at all costs.
At least to the outside world, Toshiba Memory had to retain the appearance of remaining a Japanese company. Therefore, the old Toshiba did not sell to the highest bidder (supposedly Foxconn and others wanted to pay more) and not to any foreigners, but to the Bain consortium, which allowed the beautiful "Toshiba Memory stays Japanese" construct.
Above all, Toshiba Memory may have lost its own employees to competitors during the agonizingly long sales negotiations - which could somewhat relativize the announcement to create 500 new jobs in research.
Above all, this shows above what influence politics still have on the decisions of Japanese top management. As written here a year ago, the “ringi mentality” is still widespread. It delays decisions - which is poison not only for Toshiba but for Japanese industry in global competition.
How agile Toshiba Memory can act as an independent unit remains to be seen. The most money is currently likely to flow into the development of the Chinese chip industry. What help is the Japanese state still willing to give?
What will Bain Capital give? The financier will expect one thing above all: a high return. This will certainly cost Toshiba Memory a lot of money over the coming years. It remains to be seen how high the investments can be under these conditions.
However, investments are particularly necessary when difficult times have to be overcome - which will come due to the cyclical nature of the storage business. If you want to stay ahead, you have to emerge stronger from the downward cycle. During such times, Yasuo Naruke is not the only one who wishes to have a spell "that protects us and helps us to live". But the Japanese government can sweet talk the world as much as it wants, it will not become a fairy tale world inhabited by magicians.
