Sun, Aug 06, 2017 - Page 16 News List

Toshiba to cut off chips supply to Western Digital

Bloomberg

Toshiba Corp took another stab at its US joint venture partner, Western Digital Corp, saying it has no rights to new chip production that is vital to the future of both companies.

The latest escalation of the fight between the two centers on a new factory called Fab 6.

Toshiba said it would build the plant without any participation from its US partner, thereby cutting off Western Digital from chips made with the factory’s new technology.

Western Digital inherited its stake in the joint venture when it bought SanDisk Corp.

“Toshiba is dismayed by Western Digital’s pattern of exaggerating SanDisk’s rights under the relevant agreements,” the Tokyo-based company said on Friday in a statement.

“Despite claims to the contrary, Western Digital does not now possess any legal ‘rights’ to participate in this phase of investment, which is an important investment in the next generation of flash memory,” Toshiba said.

Western Digital soon countered with a statement of its own, saying Toshiba’s position is wrong and affirming its rights.

“The terms of the agreements and our related legal rights are clear, and we remain confident that we will receive our share of any capacity from Fab 6,” the San Jose, California-based company said.

“We are continuing our constructive dialogue with Toshiba on this and other matters,” it added.

The two companies are locked in a legal fight over Toshiba’s plan to sell its share of the joint venture to make up for multibillion-dollar losses in its nuclear power operations. Further legal wrangling could delay the sale to a group of preferred bidders, putting Toshiba at risk of being delisted.

A judge on Friday agreed to change a temporary restraining order — prohibiting Toshiba from blocking Western Digital employees access to shared databases and other joint-venture facilities — into a preliminary injunction.

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