SAN FRANCISCO — Toshiba may have settled on a bid from a consortium led by private equity firm Bain Capital for its semiconductor business, but the owner of its longtime partner in NAND flash development is still working to prevent the sale.

After trying for months to hammer out a deal to acquire Toshiba's semiconductor business, Western Digital now appears to be pinning its hopes on a legal strategy that includes three separate arbitration cases and may take two years or more to resolve.

Western Digital has initiated three arbitrations against Toshiba in the matter, most recently last week when it ask the International Chamber of Commerce arbitration court to block Toshiba Memory from going to alone in investing for new equipment for NAND fabs. Toshiba had said it would invest unilaterally in equipment for a new NAND fab at its Yokkaichi operations site, shutting out Western Digital's SanDisk subsidiary, Toshiba's partner in NAND flash development and manufacturing for the past 17 years.

An earlier request for arbitration, filed in May, seeks an injunction that would require Toshiba to unwind the transfer of its semiconductor assets to Toshiba Memory Corp., a subsidiary set up for the purpose of being spun out through a sale. That arbitration request also seeks a ruling preventing Toshiba from transferring assets of the joint venture between the two companies without Western Digital's consent and interim injunctive relief presumably in the form of preventing sale of Toshiba Memory until the matter is resolved. A ruling on the request for injunctive relief is not expected until early next year, Western Digital said.

A Toshiba NAND fab at the company's Yokkaichi operations site, part of the joint venture between Toshiba and SanDisk (now owned by Western Digital). Source: Toshiba
A Toshiba NAND fab at the company's Yokkaichi operations site, part of the joint venture between Toshiba and SanDisk (now owned by Western Digital).
Source: Toshiba

Western Digital said the arbitrations — each of which will be decided by a three-member panel — are proceeding. The companies have agreed to some of the arbitrators that will sit on the panels, Western Digital said.

There is still no timetable for when the arbitration tribunals will actually begin, and Western Digital said rulings in the cases may take 24 months or more. 

The legal maneuvers by Western Digital may well put a kink in the works of Toshiba's plans to sell its chip unit to the Bain group, which also includes South Korean memory chip vendor sk Hynix, Apple, Dell and Japanese government-backed organizations Innovation Network Corp. of Japan (INCJ) and the Development Bank of Japan.

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