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An Interview with the President
6
A.Our Semiconductor business has been severely impacted by the sharp worldwide drop in
demand and also steep and continuing price declines. Based on a careful assessment of the
market situation, restructuring of the Semiconductor business will be implemented in line
with the characteristics of each business
-
discrete, system LSI and NAND flash memory. We
are also reducing fixed costs across the business, as well as greatly reducing capital
expenditures and improving the qualitative efficiency of R&D activities through expenditure
reduction and focusing more on rigorous selection of key R&D themes. In addition, we are
reorganizing production facilities, and we have implemented such personnel measures as
reassigning personnel to focus areas and making other necessary workforce adjustments.
In anticipation of future demand recovery in NAND flash memory, we acquired needed
production equipment from SanDisk Corporation. We are also promoting finer line-width
lithography technology. SSD is a highly promising data storage business area where strong
expansion in future demand is expected, and we are promoting the growth of our data
storage business by maximizing synergies with the HDD business.
In the discrete and system LSI businesses, to secure competitive leadership and improve
profitability, we are accelerating the shift of assembly operations to overseas facilities. We are
also studying more fundamental restructuring from the perspective of reorganization trends
in the industry.
Q. Could you outline the details of the Semiconductor business restructuring?
A.
At the end of FY2008, our financial conditions had deteriorated, reflecting the significant
downturn in our performance, growth of interest-bearing debt and reduction in our capital
base. In addition to reinforcing the Group-wide efforts to shorten the cash-conversion cycle
which we started in FY2008, and aggressively implementing our “Action Programs,” in June
2009, we successfully improved our financial position and secured capital for investment in
future growth fields by means of a public offering that raised ¥319.2 billion. As a result of this
move and other factors, as of the end of June, 2009, the total equity ratio was 19.9%, a 6-point
improvement from the end of March 2009, and the debt-to-equity ratio was 133%, a 105-
point improvement from the end of March 2009. We further reinforced our financial base by
issuing subordinated bonds with a value of ¥180.0 billion.
All these measures will support us in establishing Toshiba Group's business base in the
Q. What measures have you taken to beef up Toshiba Group’s financial strength?