Toshiba to invest in chip line without JV partner Western Digital

August 3, 2017

TOKYO (Reuters) – Toshiba Corp <6502.T> said on Thursday it would go ahead with the capital investment to build a new memory chip production line without joint venture partner Western Digital Corp as the two failed to reach an agreement about the investment.

The Japanese company said it has increased the amount of capital investment in the Fab 6 production line to 195 billion yen ($1.76 billion), up by 15 billion yen from its original estimate, because it is now going it alone.

The two are at loggerheads over a planned sale of Toshiba’s chip unit, which is crucial for the firm to plug a multi-billion-dollar balance sheet hole left by the collapse of its U.S. nuclear business. Western Digital says any deal would require its consent.

A Toshiba spokesman said even though the initial investment will be made unilaterally, the firm is open to talks with Western Digital about subsequent investment plans. Western Digital was not immediately available for comment.

The new line, set to start operating around next summer, will produce memory chips using next-generation three-dimensional technology as Toshiba aims to raise the 3D proportion to about 90 percent in the year ending in March 2019.

Separately, Toshiba was ordered to allow Western Digital to access databases at their memory chip joint venture, in a blow to the Japanese firm’s effort to push the U.S. partner into accepting the sale.

The California Court of Appeal on Wednesday lifted the stay of a temporary restraining order saying Toshiba must allow Western Digital’s employees to access shared databases and chip samples at their joint venture in western Japan.

Toshiba first shut out Western Digital in late June as tensions around the sale escalated. It temporarily suspended the lockout in July following a restraining order by the Superior Court of California, but reimplemented it a week later as its petition for an appeal was accepted.

(Reporting by Taiga Uranaka and Makiko Yamazaki; Editing by Chris Gallagher)

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