Toshiba Plans to Double Investments in Power and Defense Business Expansion

15 Jun, 2024

Toshiba Plans to Double Investments in Power and Defense Business Expansion

Toshiba, currently under management rehabilitation, plans to double its investments in the electricity and defense businesses, Corporate Senior Executive Vice President Koji Ikeya revealed in a recent interview. The Japanese electronics and machinery maker aims to boost profitability by investing around ¥50 billion in fiscal 2026, the final year of its newly announced three-year medium-term management plan, according to Ikeya. This amount is double the fiscal 2023 level. "Energy and infrastructure operations will lead growth," Ikeya stated.

Last year, Toshiba went private after being acquired by a consortium led by investment fund Japan Industrial Partners, aiming to remove activist investor influence. Ikeya, also vice chairman of JIP, played a key role in creating the medium-term plan. Toshiba has strengths in the energy business, covering electricity transmission and generation systems, and the infrastructure business, which includes defense radar systems. However, growth in both areas has been slowing.

Ikeya noted that increasing electricity demand, driven by generative artificial intelligence and decarbonization efforts, "can be tailwinds" for the company. "The use of digital technology will help us generate profits," he added. "We will shift from an equipment-centered business to a highly profitable maintenance-centered business."

Under the three-year plan, Toshiba is set to invest over ¥100 billion in semiconductor-related operations. It is expanding power semiconductor production at a plant in Nomi, Ishikawa Prefecture, anticipating higher demand for use in electric vehicles. The company will also consider collaborations with firms like Rohm, with which it already partners.

Toshiba plans to cut up to 4,000 jobs in Japan, mainly in back-office divisions. "We hope this will be the last round of voluntary retirements," Ikeya said. He also emphasized the need to consolidate branches and plants to improve efficiency without affecting business partners. Ikeya expressed confidence that the company can achieve an operating profit margin of 10% in fiscal 2026, a target set in the medium-term plan, by reducing fixed costs and tightening loss control.