Toshiba recovers from losses after Apple’s investment offer

But still faces a stock exchange delisting risk

Toshiba Corp’s shares finally recovered this week after Japanese broadcaster NHK reported that Apple is considering a multi-billion-dollar investment into the company’s semiconductor chip business.

Back in February, Toshiba revealed that it had been considering a split of its memory chip business into a separate company to help make up for a $ 6.56 billion write-down of its US nuclear equipment operations. In late December, the company’s shares fell more than 45 percent after revealing that it was balancing a four-part effort to get back to a profitable state.

The following month, Foxconn and TSMC both partnered up to place bids on shares of Toshiba’s memory business in an attempt to challenge Samsung’s dominance of the flash memory market. The collaboration team has been serious about its talks with Toshiba, but is not trying to force anything to happen.

Apple wants 20 percent stake in Toshiba’s chip business

Now, the latest reports from NHK suggests the fruit-themed toymaker also wants more than 20 percent stake in Toshiba’s chip business, while somehow convincing Toshiba to maintain partial stake and keep the business under US and Japanese regulations, according to anonymous sources. Without subverting existing negotiations, the Cupertino company has considered a plan where Foxconn would own around a 30 percent stake of the NAND flash business so as not to interrupt global market competition over Japan’s semiconductor industry.

Prior to Apple’s announcement, Toshiba has so far narrowed down the field of memory unit bidders to four companies, according to sources. They include Broadcom, SK Hynix, Foxconn, and Western Digital.

Attention is now on company auditor, Tokyo Stock Exchange

On Thursday, Toshiba’s shares were down 4.8 percent after declining as much as 8.1 percent during morning trade. Experts have cautioned that the company is now in warning zone of losing its listed status on the stock exchange, as it faces increased financial risk at its Westinghouse nuclear subsidiary. According to Financial Times, the Tokyo Stock Exchange is now attempting to decide whether the company’s internal controls comply with its listing criteria. Toshiba has proposed several improvements following its $ 1.3 billion accounting scandal in 2015, but if they are deemed insufficient by the exchange, then its shares could be delisted and the company would ultimately transition into a private entity.

Source: Google

Besides the foreign investor lawsuit that arrived on behalf of its accounting malpractices, Toshiba’s accounts were notable in part because its independent auditor, PwC Aarata, did not certify their accuracy. One analyst at Citigroup claims that Toshiba’s disagreement with its auditor was likely to “heighten concern” about its shares being delisted. Robert Rostan, a former Deloitte auditor, says “It is extremely rare for an independent auditor to not sign off on a client’s accounts, let alone a public industrial giant like Toshiba.”

Despite the financial risk posed by its flagship nuclear projects, Toshiba insists everything on the balance sheets is under control. Aside from a very tangible delisting risk, it will be left to the mercy of Toshiba’s many financial creditors to garner up enough support in solidarity for the weathered company.