Toshiba Fires Back at Western Digital, Seeks $1.1B in Damages

　　Toshiba Corp. said Wednesday (June 28) it filed suit against NAND flash technology development partner Western Digital Corp. (WDC), asking a Tokyo court to prevent Western Digital from further interfering with the proposed sale of its semiconductor spin off, Toshiba Memory.

　　The complaint, filed with the Tokyo District Court, seeks an injunction against WD as well as 120 billion yen (about $1.1 billion) in damages. Toshiba also said it would bar WD from accessing information about the joint venture between the two companies.

　　The lawsuit is the latest development in a feud between the two companies over the proposed sale of Toshiba's memory chip business, including its stake in the manufacturing joint venture between the two firms. Toshiba announced earlier this year that it would sell its semiconductor business to help offset massive losses by its U.S. nuclear power division. Toshiba announced last week that its preferred buyer for the spin off, Toshiba Memory, is a consortium that includes Innovation Network Corp. of Japan (INCJ) and private equity firm Bain Capital.

　　In a statement issued Wednesday, Toshiba said WD has exaggerated its rights regarding the joint venture between the two firms. WD maintains that Toshiba must obtain WD's approval to sell its stake in the joint venture to another entity.

　　Toshiba also claims that WD improperly obtained Toshiba trade secrets by transferring employees of its subsidiary, SanDisk, to WD. Toshiba and SanDisk maintained a long-running collaboration on NAND flash technology development and manufacturing prior to WD's acquisition of SanDisk last year. Toshiba said it would immediately block WD's access to information related to the joint venture between the two firms after WD rejected a contract covering the access to that information.

　　WD did not immediately respond Wednesday to request for comment on the Toshiba lawsuit.

　　WD sued Toshiba earlier this month, asking a San Francisco court to halt the sale of Toshiba Memory pending the results of an arbitration hearing between the two companies on the matter that WD requested in May.

　　WD would like to acquire Toshiba Memory and previously asked Toshiba for exclusive negotiating rights to buy the unit. It was widely reported Tuesday that WD submitted a revised bid for Toshiba Memory in conjunction with a partner, private equity firm KKR & Co.

　　In choosing the INCJ consortium as its prefered bidder, Toshiba complied with the wishes of the Japanese government, which wants Toshiba's semiconductor technology to remain in Japan. However, Toshiba said Wednesday that it would not meet its self-imposed June 28 deadline for having an agreement in place to sell Toshiba Memory due to differences of opinion by the various firms involved in the consortium. Toshiba said it intends to continue negotiating the consortium to reach a definitive agreement as soon as possible.

　　Meanwhile, Toshiba and WD also announced this week that the two companies' joint venture has successfully developed its next-generation 3D NAND technology, BiCS4, with 96 layers of vertical storage capability. The technology will initially be deployed in a 256-gigabit chip and will subsequently ship in a range of capacities, including a terabit on a single chip, according to WD.