A consortium, including a Japanese government fund, the Japanese Development Bank and South Korea’s SK Hynix, has called on Toshiba to settle its legal dispute with Western Digital before investing in the ailing nand memory division.
The consortium has strong government support, partly because it includes the Innovation Network Corp of Japan, a public-private partnership between the Japanese government and major technology companies. The consortium is therefore a good candidate for the acquisition, but is concerned about the legal risks if the conflict between Toshiba and Western Digital is not resolved, a source told Reuters.
Last month, Western Digital went to an arbitration board to prevent Toshiba from selling its chip division. According to the company, the sale violates the terms of the joint venture between Western Digital’s subsidiary SanDisk and Toshiba. The arbitration case is set to take place in California and aims to reverse the creation of Toshiba Memory. According to WD, Toshiba has transferred its nand manufacturing business to Toshiba Memory without seeking SanDisk approval.
WD also recently filed a lawsuit in a California court to prevent the sale of its chip division. The court order that has been applied for is intended as additional security until the arbitration board has rendered its decision.
On June 10, a source told Reuters that Western Digital had increased its bid for Toshiba’s nand memory division to $18 billion. The offer would be a last-ditch effort by Western Digital to take over the branch within Toshiba. Toshiba fears a Western Digital acquisition could lead to antitrust investigations, as WD is already a major producer of nand memory and would further strengthen its position with the acquisition of Toshiba’s chip division.
According to a Japanese newspaper, Toshiba is now close to an agreement with the consortium for the acquisition. This means that other candidates, such as the American chip maker Broadcom and Western Digital, may be fishing behind the net.
The Japanese trade minister previously expressed his concerns about the dispute between the two companies and called on both parties to continue working together in good harmony in the sale of Toshiba’s chip division. The minister is concerned that the dispute will jeopardize the sale of Toshiba’s memory division, but he also said he has no intention of intervening. The Japanese government would like to keep production in Japan, given the strategic value of chip production for future Japanese technology.
Toshiba splits its nand memory production into a separate company called Toshiba Memory, selling part of it as it finds itself in financial turmoil after a series of financial setbacks. After Samsung, Toshiba is currently the world’s largest manufacturer of nand memory.