Japan’s Takata Corp, the firm at the center of the auto industry’s biggest-ever product recall, filed for bankruptcy protection in the US and Japan, and said it would be bought for US$1.6 billion by US-based Key Safety Systems Inc (KSS).
In the biggest bankruptcy of a Japanese manufacturer, Takata faces tens of billions of US dollars in costs and liabilities resulting from nearly a decade of recalls and lawsuits. Its airbags have been linked to at least 17 deaths around the world.
TK Holdings, its US operation, on Sunday filed Chapter 11 bankruptcy in Delaware with liabilities of between US$10 billion and US$50 billion, while the Japanese parent early yesterday filed for protection with the Tokyo District Court.
Photo: Kyodo News via AP
Takata’s total liabilities stand at ¥1.7 trillion (US$15.3 billion), Tokyo Shoko Research Ltd estimated.
Final liabilities would depend on the outcome of discussions with automaker customers who have borne the bulk of the replacement costs, a lawyer for the company said.
The filings open the door to a financial rescue by Michigan-based KSS, a parts supplier owned by China’s Ningbo Joyson Electronic Corp (寧波均勝電子).
In a deal that took 16 months to hammer out, KSS agreed to take over Takata’s viable operations, while the remaining operations will be reorganized to continue churning out millions of replacement airbag inflators, the two firms said.
KSS would keep “substantially all” of Takata’s 60,000 employees in 23 countries and maintain its factories in Japan.
The agreement is meant to allow Takata to continue operating without interruptions and with minimal disruptions to its supply chain.
“We believe taking these actions in Japan and the US is the best way to address the ongoing costs and liabilities of the airbag inflator issues with certainty and in an organized manner,” Takata chief executive officer Shigehisa Takada said in a statement.
Takada said he and top management would resign “when the timing of the restructuring is set.”
His family — which still has control of the 84-year-old company — would likely cease to be shareholders.
KSS president and chief executive Jason Luo (羅冠宏) said in a statement that the “underlying strength” of Takata’s business had not diminished despite the airbag recall, citing its skilled employee base, geographic reach and other safety products such as seat belts.
The companies expect to seal definitive agreements for the sale in the coming weeks and complete the twin bankruptcy processes in the first quarter of next year.
However, the filings have not resolved all issues.
Honda Motor Co, Takata’s biggest customer, said it has reached no final agreement with Takata on responsibilities for the recall, adding that it would continue talks with the supplier, but anticipated difficulties in recovering the bulk of its claims.
Takata faces billions of US dollars in lawsuits and recall-related costs to its clients, including Honda, BMW, Toyota Motor Corp and others which have been paying recall costs to date.
The company also faces potential liabilities stemming from class action lawsuits in the US, Canada and other countries.
Global transport authorities have ordered about 100 million inflators to be recalled. Industry sources have said that recall costs could climb to about US$10 billion.
The ammonium nitrate compound used in the airbags was found to become volatile with age and prolonged exposure to heat, causing the devices to explode.
Costs so far have pushed the company into the red for three years, and it has been forced to sell subsidiaries to pay fines and other liabilities.
Founded as a textiles company in 1933, Takata began producing airbags in 1987 and at its peak became the world’s No. 2 producer of the safety products. It also produces one-third of all seat belts used in vehicles sold globally, along with other components.
The Tokyo Stock Exchange said its shares would be delisted on July 27. The stock has collapsed 95 percent since January 2014 as recalls mount.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts