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Western Digital seeks ban to prevent Toshiba from selling its chip business to...
[TechWeb Report] On September 27, according to Reuters, Western Digital announced on Tuesday that it is seeking a ban to prevent Toshiba from selling its semiconductor business to its competitors. This move marks the latest legal challenge in the ongoing dispute over the future of Toshiba's chip division.
Last week, Toshiba decided to sell its chip unit to a consortium led by Bain Capital and South Korean chipmaker SK Hynix. However, the $18 billion deal has not yet been finalized. Toshiba recently informed its major lenders that Apple, one of its key partners and a major customer, has not yet approved the critical terms of the agreement.
Western Digital is pushing for a ban through the International Chamber of Commerce's Court of Arbitration (ICC). Earlier this year, the company filed a lawsuit against Toshiba, arguing that any transaction involving the chip business must include their approval. The company claims that without their consent, such deals would be invalid.
According to sources, an arbitration panel consisting of three arbitrators was formed earlier this week and is expected to make a decision on the proposed ban later this year. The final ruling on the dispute is anticipated before the end of 2019.
For Toshiba, time is of the essence. The company needs to finalize the sale of its chip business quickly to raise billions of dollars in order to cover the massive debts caused by its bankrupt U.S. nuclear subsidiary, Westinghouse Electric. If it fails to do so, it risks being delisted from the Tokyo Stock Exchange.
Even if Toshiba manages to reach an agreement with the Bain Group immediately, the process will still require careful planning, as regulatory reviews typically take at least six months.
On Wednesday, Western Digital submitted another arbitration request to block Toshiba from investing in a new chip factory in Yokkaichi, Japan, unless Western Digital’s subsidiary SanDisk is also allowed to participate in the investment. This further highlights the intensity of the legal battle between the two companies over control of the semiconductor market.