Toshiba plans to exit money-losing LSI chip business

[TOKYO] Toshiba Corp on Tuesday said it will exit the money-losing system LSI chip business as the Japanese conglomerate aims to boost the group's profit margins.

The chip business includes image recognition processors supplied to Toyota Motor, although Toshiba said it would continue sales and support operations for existing customers.

Toshiba plans to relocate or offer early retirement options to 770 employees at its system LSI business, a step that will cost the Japanese company 11.8 billion yen (S$153 million) but has already been factored in its earnings outlook. However, its power management chip business will be retained.

The company said in a statement it decided to withdraw and "establish a solid business structure not easily affected by market fluctuations; one that is sustainable even during the continuing US-China trade conflict." Toshiba sold its prized flash memory business, now Kioxia Holdings, to a consortium led by Bain Capital for US$18 billion in 2018 as it scrambled to plug a financial hole caused by the failure of its US nuclear power unit.

Kioxia on Monday shelved plans for what would have been Japan's largest initial public offering (IPO) this year, as US-China tensions cloud the global chip market.

REUTERS