Uncertainty over which company will end up with Toshiba's much-sought-after NAND chip unit -- the second-biggest in the world -- has deepened today with a report by Reuters, which states that the Japan-based Toshiba is now facing legal actions from its business partner and chip unit bidder Western Digital. The U.S.-based data storage company is claiming that Toshiba has violated a contract by transferring Western Digital's joint venture rights entirely to the newly formed chip unit, which Toshiba is soon to sell off.

As a result, Western Digital is reportedly asking for exclusive negotiating rights with Toshiba as a means to win the bid and retain its contract with the supplier, and the U.S. company is threatening legal action in the event that it does not. Western Digital currently operates a semiconductor plant in a joint partnership with Toshiba, but it is not seen as a favored bidder in the eyes of Toshiba executives because it has placed a "much lower offer than other suitors."

toshiba WD
The legal process set in motion by Western Digital could not only delay Toshiba's NAND chip unit sale, which the company needs to be completed to offset a nearly $9 billion loss related to its overseas nuclear division, but could put an end to the auction altogether. Toshiba has rejected any of Western Digital's claims that it has violated the joint venture contract.

The clash between Toshiba and Western Digital - both its business partner and one of the bidders for the chip unit - risks delaying or even quashing an auction that the Japanese conglomerate is depending on to plug a $9 billion hole in its accounts.

But in a May 3 letter sent by Toshiba's lawyers, the TVs-to-nuclear conglomerate disputed Western Digital' s argument and said it would pursue all available remedies if it saw continued interference in the sale process. Western Digital's "campaign constitutes intentional interference with Toshiba's prospective economic advantage and current contracts. It is improper, and it must stop," the letter, which was seen by Reuters on Tuesday, said.

Western Digital now has until May 15 to sign a few agreements related to its joint venture partnership with Toshiba, and if it doesn't all Western Digital employees will be restricted from facilities, networks and databases related to Toshiba's NAND chip unit. According to Masahiko Ishino, an analyst at Tokai Tokyo Research Center, Western Digital has a solid ground for legal action: "From a commonsense standpoint, it's hard to buy Toshiba's argument that it doesn't need approval from its JV partner because it's almost a 50-50 joint venture."

Outside of the legal battle, Toshiba executives are said to be prioritizing potential bids from what would amount to a consortium of the New York-based private equity firm KKR & Co LP and a few Japanese government-backed investors representing Japan Innovation Network Corp. The Japanese government is said to be "keeping a close eye on the process," and would prevent any deal that could potentially transfer sensitive technological information to another country, namely Foxconn and its deep China ties.

Now, KKR and Japan Innovation Network Corp are preferred bidders, and are expected to enter a joint offer in the upcoming second round of bidding in mid-May. If the duo win exclusive rights to Toshiba's NAND chip unit, the technology would stay in Japan, appeasing the local government, and the new owners of the unit could aim for an IPO down the line.

The two new preferred bidders come after TSMC and Foxconn were originally reported as the main companies interested in Toshiba's chip unit, but TSMC eventually dropped out and then Foxconn faced troubled waters with the Japanese government. Last month, Apple was rumored as willing to spend several billion dollars to obtain a "substantial stake" in the Toshiba NAND chip unit, with enough of a share ownership to allow Toshiba's executives to retain partial ownership in Japan.

Other potential buyers include South Korea's SK Hynix, Amazon, Google, Broadcom, and more, who are all looking for a major foothold in the flash memory market that could allow them to compete with the likes of Samsung. The winning bidder is expected to be revealed sometime in June.

Top Rated Comments

mabhatter Avatar
105 months ago
I'm with Toshiba on this, keep it in the family, no need to risk it getting into china's hands and giving them more IP they didn't invent. WD needs to be patient and they may have blown it.
The problem WD has is that Toshiba is selling all of Toshiba's assets in the joint venture without actually addressing the joint venture. That effectively disolves the JV without negotiating separation terms. If the terms are almost due for renewal, then WD is at a severe disadvantage to negotiate with whoever the new owners are. Toshiba must be hard up for money, because selling stuff while it's still in partnership is scummy business.
Score: 2 Votes (Like | Disagree)
Pbrutto Avatar
105 months ago
Still amazes me, like Samsung, the scope of some companies. Being able to buy a tv from the same company that powers it with their nuclear reactor is over the top.
Score: 2 Votes (Like | Disagree)
PinkyMacGodess Avatar
105 months ago
Don't worry. Both Chinese government and Japanese government will not agree with the deal between Foxconn and Toshiba that easily. Plus Chinese government WILL steal Toshiba IP eventually using their advanced infamous hack army.
And the party that sold the manufacturing core of America to the Chinese (and many others) will keep lying about 'Bringing Jobs Back To America(tm)', even if they are just lawyer, and janitorial jobs.
Score: 1 Votes (Like | Disagree)
PinkyMacGodess Avatar
105 months ago
But how much of WD stuff isn't made in China?

If Toshiba wants to keep the IP out of China, they should steer clear of Western Digital AND Apple, with the later's ties to Foxconn...

But good luck for Toshiba keeping anything out of China. They probably already know everything they need to know to swamp Toshiba, and make all this squabbling more pointless than it seems now...:rolleyes:
Score: 1 Votes (Like | Disagree)
sudo1996 Avatar
105 months ago
Still amazes me, like Samsung, the scope of some companies. Being able to buy a tv from the same company that powers it with their nuclear reactor is over the top.
Seems there are a lot of Japanese companies that do it too. Mitsubishi, Hitachi, and Sony sell the most surprising things. It's pretty cool, and I'm just guessing they do it because their brand is valuable. I saw a Hitachi bulldozer and was confused for a second because I've got Hitachi HDDs in my Mac.
Score: 1 Votes (Like | Disagree)
Shirasaki Avatar
105 months ago
But how much of WD stuff isn't made in China?

If Toshiba wants to keep the IP out of China, they should steer clear of Western Digital AND Apple, with the later's ties to Foxconn...

But good luck for Toshiba keeping anything out of China. They probably already know everything they need to know to swamp Toshiba, and make all this squabbling more pointless than it seems now...:rolleyes:
Don't worry. Both Chinese government and Japanese government will not agree with the deal between Foxconn and Toshiba that easily. Plus Chinese government WILL steal Toshiba IP eventually using their advanced infamous hack army.
Score: 1 Votes (Like | Disagree)

Popular Stories

Apple Glass

Apple Smart Glasses: Everything We Know So Far

Wednesday May 21, 2025 8:21 am PDT by
Google recently made waves by showcasing a set of lightweight smart glasses featuring deep Gemini integration and an optional in-lens display. The demo has reignited interest in Apple's own smart glasses project, which has been the subject of rumors for nearly a decade. Here's a recap of where things stand. Current Development Status Apple is actively working on new chips specifically...
Apple Glasses Purple Feature

Apple Smart Glasses Launching in 2026

Thursday May 22, 2025 12:22 pm PDT by
Apple is planning to launch a set of smart glasses by the end of 2026, reports Bloomberg. The glasses will be comparable to the Meta Ray-Bans and the Android XR glasses that Google showed off earlier this week. Apple's smart glasses are expected to include cameras, microphones, and AI capabilities, much like the Meta Ray-Bans. The glasses will be able to take photos, record video, provide...
Apple CarPlay Ultra instrument cluster themes 01

Apple's CarPlay Ultra Is Here – Does Your iPhone Support It?

Thursday May 15, 2025 5:17 am PDT by
Apple's recently announced CarPlay Ultra promises a deeply integrated in-car experience, but not all iPhone users will be able to take advantage of the new feature. According to Apple's press release, CarPlay Ultra requires an iPhone 12 or later running iOS 18.5 or later. This means if you're using an iPhone 11, iPhone XR, or any older model, you'll need to upgrade your device to access...
maxresdefault

OpenAI Buys Jony Ive's AI Startup to 'Completely Reimagine What It Means to Use a Computer'

Wednesday May 21, 2025 10:27 am PDT by
OpenAI is acquiring io, the hardware-based AI startup co-created by Jony Ive, OpenAI announced today. Ive has been working with OpenAI CEO Sam Altman on io for two years, and the duo expects to develop a family of AI devices. In a video shared by OpenAI, Altman and Ive outlined their partnership and what they expect to create as a result of the merger. "I have a growing sense that everything ...
iPod shuffle generations

Kuo: Jony Ive's Futuristic OpenAI Device Like a Neck-Worn iPod Shuffle

Thursday May 22, 2025 8:05 am PDT by
The big news in the technology world this week is that ChatGPT maker OpenAI is working more closely with Apple's former design chief Jony Ive on a futuristic AI device. The company is remaining tight lipped about the device, but Apple supply chain analyst Ming-Chi Kuo has shared some alleged details about its design. In a social media post today, Kuo said the device will be "slightly larger" ...
WWDC 2025 Banner

Apple Announces WWDC 2025 Schedule, Including Keynote Time

Tuesday May 20, 2025 8:13 am PDT by
Apple today announced a more detailed schedule for its annual developers conference WWDC, which runs from June 9 through June 13. The schedule confirms that Apple's keynote will begin on Monday, June 9 at 10 a.m. Pacific Time, with a live stream to be available on Apple.com, in the Apple TV app, and on YouTube. During the keynote, Apple is expected to announce iOS 19, iPadOS 19, macOS 16,...
macOS 16 visionOS Inspired Feature 1

macOS 16: Everything We Know So Far

Tuesday May 20, 2025 7:31 am PDT by
The Worldwide Developers Conference (WWDC), Apple's annual developer and software-oriented event, is less than three weeks away. We haven't heard a great deal about macOS 16 ahead of its announcement this year, so we could be in for some major surprises when June 9 rolls around. Here's what we know so far about the next major update to Apple's Mac operating system. macOS 16 Name? Every year ...