Toshiba, Western Digital to resume joint investment as chip dispute ends

Toshiba Corp and its chip business partner Western Digital Corp agreed to settle a long-running dispute over the embattled Japanese conglomerate's plans to sell its chip unit, the companies said in a statement, removing a key obstacle to the deal.

Toshiba agreed in late September to sell Toshiba Memory, the world's second-biggest producer of NAND chips, to a consortium led by Bain Capital LP for $18 billion to cover billions of dollars in liabilities arising from Toshiba's now bankrupt US nuclear power unit Westinghouse.

With data storage key to most next-generation technologies, demand for NAND chips has boomed, and Western Digital, Toshiba's chip business partner and jilted suitor in the auction, had threatened to block any deal without its consent.

The settlement calls for Western Digital to drop arbitration claims seeking to stop the sale to the Bain consortium in exchange for Toshiba allowing the US partner to invest in a new production line starting next year for advanced memory chips.

As part of the settlement, Toshiba and Western Digital will extend existing agreements for their chip joint ventures in Yokkaichi, central Japan, until 2027 or later. The current agreements are set to start expiring from 2021.
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