Toshiba and Western Digital fight over flash memory division

Toshiba is in serious trouble already, as it faces the risk of bankruptcy. In February, it announced it would take a $6.3 billion write down, and it is currently trying to sell off its NAND flash memory division in order to stay in business. Now there’s word that Toshiba is telling one of its partners, Western Digital, to back off, as it feels that the hardware storage company is trying to interfere with the sale of its flash memory business.

Reuters reports that Toshiba and Western Digital jointly operate Toshiba’s main semiconductor plant. However, Western Digital claims that Toshiba is violating the terms of its contract in this venture, stating that Toshiba is trying to transfer the rights from that joint operation to the sale of the flash memory chip unit. It wants exclusive rights to bid on that division.

Toshiba doesn’t see things that way, however. In a letter sent to its lawyers, the company claims Western Digital’s efforts “constitutes intentional interference with Toshiba’s prospective economic advantage and current contracts. It is improper, and it must stop.” A separate letter also claims Western Digital has not yet signed some joint venture agreements with Toshiba, and if it does not sign by May 15, its employees will not be able to access Toshiba’s facilities, networks, and databases.

The Japan-based Toshiba is reportedly considering a number of bids for its flash memory division, including ones from Foxconn, South Korea’s SK Hynix and US-based Broadcom. It may also get a joint bid from the US-based venture capital firm KKR and Japan Innovation Network Corp. Recent rumors have claimed Apple could be interested in bidding as well.

Western Digital says it is opposed to Broadcom’s bid, and Reuters reports that the Japanese government could block bids from other companies if it feels that such a sale could involve some sensitive technologies. The government may feel such a deal would be too big of a risk for Japan’s national security. In any case, Toshiba really needs to sell off its flash memory unit, as the money could help to fix its huge $9 billion deficit. We should learn more about those plans later in May when the company reveals it full fiscal year financial report.