Toshiba Corp is moving forward with plans to build a new memory chip plant without longtime venture partner Western Digital Corp.
The electronics maker will spend ¥195 billion (US$1.76 billion) on construction of Fab 6 of its semiconductor facility in Yokkaichi, Japan, the Tokyo-based company said in a statement yesterday.
Toshiba, which owns the land, buildings and the production know-how at the factory, has split investments in the equipment with SanDisk Corp since the joint supply venture started in 2004. Western Digital acquired SanDisk last year.
Toshiba and Western Digital are locked in an escalating legal fight over Toshiba’s plan to sell its share of the business to make up for multibillion-dollar losses in its nuclear power operations.
Western Digital is arguing that it has a say in the sale, as well as the right of first refusal.
Further legal wrangling could delay the sale to a group of preferred bidders, putting Toshiba at risk of being delisted.
“Toshiba has held discussions with SanDisk over several weeks, but could not arrive at an agreement because of the vast difference in opinions over capital spending,” Toshiba spokeswoman Kaori Hiraki said. “We need to boost our production capability to meet increasing demand for NAND flash.”
Toshiba said it is spending ¥15 billion more than originally planned, but going it alone would not impact production or development.
Installation of fabrication equipment to produce so-called 3D NAND flash is to begin in December and output should ramp up to 90 percent of capacity in the fiscal year ending March 2019, Toshiba said.
“While we are disappointed by Toshiba’s announcement, the agreements governing the joint ventures give us the right to participate in investments,” Western Digital said in a statement. “That is exactly what we intend to do.”
Western Digital in May invoked an arbitration clause in the business agreement, seeking to block Toshiba’s transfer of ownership of its memory chip unit to a separate legal entity in preparation for a sale.
Toshiba, which has since reversed that transfer, then had its lawyers send a letter demanding that the US company stop its “harassment” as it seeks to sell the business.
If Toshiba is forced through arbitration to sell its stake in their venture to Western Digital, the move could trigger the dissolution of their legal partnership, according to regulatory filings.
That would cancel the supply agreement under which the US company gets chips and which make it the owner of only some equipment, according to people close to Toshiba and the terms of their relationship.
That equipment would be useless without other machinery and the plant itself, which would remain Toshiba’s property and production of memory chips for Western Digital would stop, the people said.
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