The Yomiuri ShimbunToshiba Corp., which is undergoing business reconstruction, announced Wednesday that it had settled its dispute with Western Digital Corp. of the United States over the planned sale of its memory chip subsidiary, Toshiba Memory Corp.
While the joint venture continued, Toshiba and Western Digital have been at loggerheads ever since.
Last month, the Tokyo-based company said it would accelerate investments in its new Fab 6 chip facility in Yokkaichi, blocking Western Digital from participating and raising the prospect the US company wouldn't get supplies of newer chips that it will need to remain competitive. But conflicts with Western Digital arose when Toshiba said it reached a deal to sell its interest in the joint venture to Bain Capital, in a consortium that included South Korean chipmaker S.K. Hynix.
Western Digital Chief Executive Officer Steve Milligan said during a conference call for investors, "This agreement is a win-win for all parties". As a countermeasure, Toshiba in June filed a lawsuit with the Tokyo District Court against Western Digital, seeking damage compensation.
Bain Capital, which has led the deal to acquire a third share in TMC, is also happy with the outcome.
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Western Digital will allow Toshiba Memory to sell its stake in the joint venture to a consortium led by Bain Capital. According to the plans, Fab 6 will make flash memories based on 3D BiCS technology in 2018.
The partners have been locked in a legal battle since early this year after Toshiba said it would sell the chip business to pay for enormous losses in its USA nuclear business.
The joint statement said both companies "have agreed on mutual protections for their assets and confidential information in connection with the sale of Toshiba Memory, and on collaborating to ensure the future success of Toshiba Memory as a public company following an eventual IPO". The deal is structured so that Toshiba and Hoya Corp. will hold a majority of the voting stock, a solution that keeps control of sensitive technology in Japanese hands. Over the course of several months as the severity of Toshiba's financial situation became clearer, their plans shifted to a complete sale of the memory business, valued around $18 billion. It announced in October that it would expand flash memory production capacity in Japan without Western Digital's participation, potentially restricting Western Digital's access to an important source of advanced memory drives, which it needs in ever-greater numbers to supply its own customers. The transaction is still subject to regulatory approvals.