Toshiba: Flash Memory, the Westinghouse Bet and $1.2B in Inflated Profits

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Toshiba grew from two struggling 19th century firms: Tanaka Seisakusho, founded in 1875 by inventor Tanaka Hisashige to make Japan's first telegraph equipment, and Hakunetsusha, a bamboo-filament light bulb maker founded in 1890 by Miyoshi Shoichi and Fujioka Ichisuke. After rebranding as Shibaura Seisakusho and Tokyo Denki, they merged in 1939 as Tokyo Shibaura Denki, shortened to Toshiba in 1978. Owning everything from power generation to the bulb, the company rode Japan's postwar boom with the TAC digital computer in 1954, transistor televisions and microwave ovens in 1959, Japan's first word processor in 1978 and the T1100 laptop in 1985. In the 1980s a team led by Fujio Masuoka invented flash memory, first NOR, then the denser and cheaper NAND that now stores data in phones everywhere.

The sprawling keiretsu also produced scandal. In 1987 a Toshiba subsidiary was caught selling precision milling machines to the Soviet Union in violation of the COCOM embargo, helping it build quieter submarine propellers. In 2008 Toshiba conceded the HD DVD format war to Sony's Blu-ray. Its 2006 purchase of Westinghouse for $5.4 billion turned disastrous after the 2011 Fukushima Daiichi disaster, where Toshiba had built Unit 3, as fixed-price contracts for the Vogtle and V.C. Summer plants ran over. A 2015 investigation found profits inflated by $1.2 billion over seven years, CEO Hisao Tanaka resigned with eight other officials, and in 2017 Westinghouse filed for bankruptcy, leaving a $6.3 billion write-down. After selling its divisions, Toshiba accepted a $15 billion buyout from the JIP consortium and was delisted in December 2023 after 74 years on the Tokyo Stock Exchange.

• Keiretsu loyalties ran so deep that Toshiba employees predominantly drank Asahi beer because of corporate alliances.
• Executives handed division heads impossible financial targets called "challenges," and managers falsified ledgers rather than admit failure.
• The memory business that invented flash went to a Bain Capital-led consortium for $18 billion and now operates as Kioxia.
• Regza televisions went to Hisense, home appliances to Midea, medical systems to Canon, and the PC line to Sharp under the Dynabook name.
• The private, slimmed-down Toshiba is now putting research money into quantum cryptography.