Toshiba Chip Business Changes Name Before Planned IPO

(Bloomberg) -- Toshiba Memory Corp., the world’s second-largest memory chipmaker that was spun out of its parent last year, is changing its name to Kioxia as it gears up for an initial public offering.

By taking a new name, the semiconductor company is marking a clean break from its roots as a unit of Toshiba Corp., which retained a 40% stake after selling it to a group led by Bain Capital. Kioxia is an invented word that combines the Japanese word for memory — kioku — and axia, the Greek term for value. The new moniker takes effect Oct. 1 under the full name Kioxia Holdings Corp.

“It’s really meant to denote a fresh start as an independent company,” said Stacy Smith, the former Intel Corp. chief financial officer who became chairman of Toshiba Memory last year. “We’re not running from our rich heritage.”

Toshiba, a Japanese conglomerate founded in the 1800s, invented flash memory three decades ago. The chips are used to store data in iPhones and other smartphones, as well as gadgets such as USB drives and memory cards. Memory chips are also displacing hard drives in the data centers that power cloud-based computing services and internet businesses because of their speed and reliability. Toshiba had to sell the business to pay for losses at its bankrupt nuclear power unit.

While Bain has made clear that it’s planning to hold an IPO for the business by mid-2021, local media have reported that it may file for a public sale as soon as this summer or September. The investor has hired banks including Nomura Holdings Inc. and Mitsubishi UFJ Financial Group Inc. to handle the IPO, people familiar with the matter have said. Smith declined to comment on the timing of the planned IPO.

Separately, Smith said the company’s main factory, which was hit with a power outage on June 15, would return to full production capacity over the next several weeks. Equipment at the plant, in Yokkaichi, Japan, is already back online and is now being ramped up, he said. The disruption also impacted Western Digital Corp., its manufacturing partner at the plant.

“The silver lining to that one was it happened in a time when supply was ahead of demand,” Smith said. “That’s helping us to minimize the impact on our customers.”

Although Toshiba was the leader in NAND flash memory, it was outspent over the years by the likes of Samsung Electronics Co. The South Korean electronics conglomerate controlled 30% of the market at the end of 2018, followed by Toshiba with about 19%, according to researcher TrendForce Corp. The industry is now shifting to so-called 3-D NAND, which Toshiba believes gives it an edge against Samsung.

Asked about recent trade tensions between Japan and South Korea, and the potential impact on memory prices, Smith said he didn’t see any impact that diverged from industry forecasts.

Toshiba has been increasing investments at its Fab 6 chip facility in Yokkaichi, and also announced plans to build a new plant in the northern prefecture of Iwate that will begin mass production in 2020.

--With assistance from Yuki Furukawa.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

To contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Reed Stevenson

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