Toshiba Will Cut Off Future Supply of Chips for Western Digital

Toshiba Will Cut Off Future Supply of Chips for Western Digital
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Toshiba took another stab at its U.S. joint venture partner, Western Digital, saying it has no rights to new chip production that’s vital to the future of both companies, according to Bloomberg.

The latest escalation of the fight between the two centers on a new factory called Fab 6. Toshiba said it will build the plant without any participation from its U.S. partner, thereby cutting off Western Digital from chips made with the factory’s new technology. Western Digital inherited its stake in the joint venture when it bought SanDisk.

“Toshiba is dismayed by Western Digital’s pattern of exaggerating SanDisk’s rights under the relevant agreements,“ Toshiba said in a statement. “Despite claims to the contrary, Western Digital does not now possess any legal ‘rights’ to participate in this phase of investment, which is an important investment in the next generation of flash memory.“

Western Digital soon countered with a statement of its own, saying Toshiba’s position is wrong and affirming its rights. “The terms of the agreements and our related legal rights are clear, and we remain confident that we will receive our share of any capacity from Fab 6,“ Western Digital said. “We are continuing our constructive dialogue with Toshiba on this and other matters.“

Western Digital needs to retain access to output from new Toshiba factories as improvements in manufacturing technology are one of the key determinants of success in the memory chip industry. Newer plants and equipment typically produce better semiconductors more cheaply.

Toshiba said the talks haven’t proved fruitful. “Toshiba provided an investment proposal to SanDisk earlier this year,“ it said in the statement. “Despite numerous meetings and negotiations, including at the CEO to CEO level, Toshiba’s proposal was not accepted on the timetable set out in the agreements.“