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EPTE Newsletter: Toshiba to Tank?

The Japanese electronics industry continues to struggle through hard times. All the major electronics companies in Japan face financial difficulties, and both Sanyo and Sharp shut down their own businesses and disappeared from the Japanese market. The two remaining powerhouses, Panasonic and Sony, made tough decisions over the years and closed or consolidated several major divisions and businesses as they fight for survival.

Toshiba could be the next major electronic company to announce significant changes as they face multibillion dollar charges for U.S. nuclear project costs. News reports over the last few months quote business analysts saying that Toshiba may not survive without financial help.  They expect Toshiba’s balance sheet will be ugly, and its shares are tanking. My business relationship with Toshiba spans more than 35 years, and I love their technology policy and engineering staff. I am concerned whether they can survive in this competitive electronic industry.

Tanaka Seizo-sho (Tanaka Engineering Works), was founded in 1875 in Ginza, Tokyo, as Japan’s first telecommunication equipment supplier. Toshiba was formed after a few mergers and acquisitions, and grew continuously over the next 140 years, remaining the technological leader in the industry. Toshiba group now has more than 180,000 employees with $50 billion in revenue, and manufactures everything from consumer electronic products to nuclear power generators and missiles. Their engineering department remains the cutting-edge leader in many categories that include semiconductors, telecommunication equipment, electric generators, medical equipment and more. Even though Toshiba was not the first to develop certain products, their engineers improved on them in a short time. Mobile products and home appliances are a couple of examples. Toshiba was once one of the top five suppliers for notebook computers in the North American market.

Some could argue that Toshiba’s success sprang from their engineering leadership. They were the leaders in the industrial and commercial markets with power generators and medical equipment, but they fell short in the consumer market. Toshiba did not have a strong market share with flat panel TVs or smartphones. You could blame this on their leadership team and its bureaucracy and lack of flexibility. 

Their financial problems probably started with the IT recession in 2001. Toshiba was losing its market position in many areas, so they decided to expand the nuclear power business, and acquired Westinghouse in the U.S. Unfortunately, it was a big mistake. One of its subsidiaries had a huge debt of more than $7 billion. This forced Toshiba to sell their profitable medical business to Canon. This was still not enough, and now they are considering selling their semiconductor business.

Toshiba built their empire over the last 140 years. Unfortunately, one wrong business decision could crumble the empire. Many capable employees including well-qualified engineers will lose their jobs. Most of my business associates at Toshiba have left the company. This falls squarely on the shoulders of the executive team at Toshiba. 

Headlines of the Week 

1. ZMP (Venture company in Japan) 2/16

Has rolled out the ultra compact platform “RoboCar MV2 2017” for the R&D purpose of the EV cars.

2. Kyoto University (Japan) 2/15

Has mathematically studied the nanowire formation process of the graphene nano-ribbons. It will be valuable to analyze the mechanisms of the nano-electronics.

3. Bando Chemical (Material supplier in Japan) 2/17

Has commercialized a new flame retardant conveyer belt “FR7500.” It is heat resistant up to 100°C.

4. Murata (Major component supplier in Japan) 2/21

Has commercialized the world first 0201M size ceramic chip capacitor with 100 pF for cellular phones and other mobile devices. Size: 0.25 x 0.125 mm.

5. Tohoku University (Japan) 2/21

Has developed a new silicon-based anode material for the high-performance lithium ion batteries utilizing waste silicon wafers.

6. Canon (Major electronics company in Japan) 2/23

Has commercialized the industry first replica mask producer for the nano-in-print manufacturing process down to 10 nanometers range of the semiconductors.

7. RIKEN (Major R&D organization in Japan) 2/27

Has developed a new deep UV light LED device with a high-power efficiency as the alternative light source of mercury lamp.

8. Mitsubishi Electric (Major electric and electronics company in Japan) 2/27

Has agreed with Cognex K.K., a leading supplier of vision sensors and code readers, for the long-term business cooperation in the FA sensor market.

9. Sumitomo Electric (Major cable manufacturer inn Japan) 2/28

Has rolled out the new small size, but high-efficiency power storage system, POWER DEPO III, with lithium ion batteries for home use.

10. Nichicon (Major component supplier in Japan) 2/28

Has co-developed a new SiC base power conversion module for the power sources of the accelerators at high frequencies, with Osaka University and Riken. 

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