Toshiba, Western Digital settle chip unit dispute

December 13, 2017

Tokyo- Toshiba Corp.said Wednesday that it has settled a dispute with its flash memory business partner, Western Digital Corp., over its planned sale of subsidiary Toshiba Memory Corp.

The agreement to settle all litigation and arbitration represents a major step forward for the chip unit sale, a key part of the struggling Japanese electronics and machinery group's efforts to reinforce its financial base damaged by huge losses from the US nuclear plant business.

Western Digital will now withdraw its request to an international arbitration court for an injunction against the chip unit sale, and participate in a new facility investment project at a memory chip factory in Yokkaichi, Mie Prefecture, western Japan, that it jointly runs with Toshiba.

Meanwhile, Toshiba will drop its lawsuit against the US hard disk drive maker, which has been filed with Tokyo District Court.

The two companies will also consider joint investment in a planned factory in Kitakami, Iwate Prefecture, northeastern Japan.

They agreed to continue their flash memory collaboration after the envisioned stock exchange listing of Toshiba Memory in some three years' time.

"With the concerns about litigation and arbitration removed, we look forward to renewing our collaboration with Western Digital, and accelerating (Toshiba Memory's) growth to meet growing global demand for flash memory," Toshiba Senior Executive Vice President Yasuo Naruke, also president of the flash memory unit, said in a statement.

Western Digital is "very pleased" that the settlement will "allow Toshiba to achieve its objectives, and also enable us to continue delivering on the power of our platform," Chief Executive Officer Stephen Milligan said.

Toshiba has clinched a deal to sell the chip unit to a Japanese-US-South Korean consortium led by US private equity firm Bain Capital.

Following the settlement of the dispute with Western Digital, antitrust screenings in related countries, including China, remain a hurdle to the sale, which are expected to take at least a half year.

In case it fails to finish the unit sale before fiscal 2017 ends next March, a situation that would lead to Toshiba's delisting from the Tokyo Stock Exchange, the company raised 600 billion yen this month by selling new shares in an allotment to some investors. Jiji Press