Toshiba Cuts WD Out of New Fab Investment

　　Toshiba announced it would go it alone in buying equipment for a new fab at its Yokkaichi Operations manufacturing site, shunning NAND flash technology and manufacturing partner Western Digital (WD) in the latest dust up in a spate between the firms that threatens to hold up the sale of Toshiba's semiconductor business.

　　WD said it still plans to participate in the funding for equipping the fab.

　　Toshiba said Thursday (Aug. 3) that its recently formed memory chip subsidiary, Toshiba Memory Corp., negotiated with WD's SanDisk subsidiary on joint investment for equipment in the fab, but that the two sides failed to reach an agreement. Toshiba said it will spend about 195 billion yen ($1.76 billion) to move forward unilaterally with buying gear for Phase 1 of the Fab 6 cleanroom and construction on Phase 2 at the Yokkaichi site.

　　Toshiba said it would spend an additional 15 billion yen ($136 million) to install equipment in Fab 6. The installation is expected to begin in December, Toshiba said.

　　"This decision to move forward with a unilateral investment in Fab 6 does not impact production for the memory business, as Toshiba memory produces the memory," Toshiba said in a statement.

　　Western Digital said in a statement that it has been in "constructive dialogue" with Toshiba over several weeks on planned investment in the companies joint ventures, including Fab 6. Those discussions are ongoing, WD said.

　　WD said in the statement that the joint ventures between the two firms are governed by agreements that "set out a framework for any investment by the partners in NAND manufacturing capacity – such as the investment in equipment for Fab 6. The agreements give us priority to participate in joint investments in Fab 6 equipment through the JVs, and that is exactly what we intend to do."

　　Fab 6 will initially produce Toshiba's 96-layer bit-cost-scalable (BiCS) NAND flash memory, demand for which Toshiba expects to remain high through this year and 2018.

　　Toshiba and WD have been feuding since Toshiba announced it would sell its semiconductor business, including its stakes in the joint ventures with WD, to help offset huge losses suffered by its U.S. nuclear power subsidiary. WD, which has bid multiple times to buy the business from Toshiba, maintains that Toshiba needs its consent to sell to another party. The two firms have been litigating various related issues in multiple venues and are expected to have an arbitration hearing at the International Chamber of Commerce later this month.

　　Toshiba in June named a consortium led by the Innovation Network Corporation of Japan (INCJ) — a public-private partnership between the Japanese government and 19 corporations — as its preferred bidder for the memory chip business, which is expected to fetch at least $18 billion. However, a deal has not materialized and the Reuters news service has reported that members of the INCJ consortium — which also includes the Development Bank of Japan, private equity firm Bain Capital and South Korean memory chip vendor Hynix — want Toshiba to resolve the challenge by WD prior closing the deal.

　　Reuters has also reported that WD's bid for the memory chip unit is among others still being considered by Toshiba's board of directors.

　　Toshiba also said Thursday it would restore access to databases involved in the joint ventures for SanDisk employees after being ordered by a California court to do so. Toshiba said it is not obligated to provide access to information created after June 28. Toshiba is appealing the court's ruling.