SAN FRANCISCO—An arbitration requested by Western Digital Corp. (WD) this week could complicate or delay the sale of partner Toshiba Corp.'semiconductor business.
WD,which in 2016 acquired Sandisk, Toshiba's longtime partner in flash memory, requested an arbitration by the international Chamber of Commerce over the planned sale of Toshiba's chip business and Toshiba's stake in a joint venture NAND manufacturing fab operated by the two companies in Yokkaichi in Japan's Mie prefecture. WD wants Toshiba to unwind the transfer to its chip business to a new spin off subsidiary, Toshiba Memory, created specifically as a vehicle for the sale of Toshiba's chip business, including its well-regarded NAND flash business.
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Toshiba is currently trying to auction off its semiconductor unit to raise cash to plug a gaping hole in its financial stability caused primarily by huge losses at its failed U.S. nuclear power subsidiary. Toshiba reportedly received about 10 bids for the sale of its chip unit, valued at about $17.5 billion, and is said to have narrowed it down to roughly five suitors.
WD is among the firms that submitted bids to acquire Toshiba's chip business, including Toshiba's portion of the JV fab. But WD's bid reportedly came in lower than others.
The Fab 2 semiconductor fabrication run by Toshiba and Western Digital in Yokkaichi, Japan.
Other bids receiving attention reportedly include those made by Broadcom Corp. with private private equity investor Silver Lake Partners, Toshiba memory chip rival SK Hynix of South Korea and Hon Hai Precision Co. Ltd., the world's largest electronics contract manufacturer, which reportedly submitted the largest bid at about $27 billion. A joint bid by private equity firm Kohlberg Kravis Roberts (KKR) and Innovation Network Corp. of Japan (INCJ) is also among those still being scrutinized by Toshiba.
WD reportedly sent a letter to Toshiba last month demanding that Toshiba halt the sale and grant WD exclusive negotiating rights. According to the Nikkei news service, WD CEO Stephen Milligan and Toshiba President Satoshi Tsunakawa met last week but did not come to a resolution on the dispute.
NEXT PAGE: Legal action not WD's first choice