Money-losing Toshiba Corp. said yesterday that it has chosen a U.S.-Japan consortium as the preferred bidder in the sale of its lucrative memory chip business, but hurdles remain as an American joint-venture partner is opposing the move.
Toshiba sorely needs the sale, with its U.S. nuclear unit Westinghouse Electric Co. racking up massive red ink and filing for bankruptcy protection.
Tokyo-based Toshiba said the board of directors selected the bid, totaling about 2 trillion yen (USD18 billion), from the consortium of Innovation Network Corp. of Japan, Bain Capital Private Equity and the Development Bank of Japan in the sale of Toshiba Memory Corp.
But Western Digital of the U.S., which has acquired some SanDisk chip operations, including a joint venture with Toshiba in Japan, reiterated its opposition to such a move. It said in a statement that Toshiba “has no right” to transfer the joint venture without its consent.
It said it filed a request for arbitration last week. Toshiba has accused Western Digital of interfering with its sales efforts. Such sales can be sensitive because they involve the transfer of technology.
SK Hynix, a major South Korean chip supplier, confirmed it was a lender to the consortium, “seeking new business opportunities,” but declined to elaborate. Toshiba said Mitsubishi UFJ Financial Group of Japan was also a financer for a consortium member, but neither SK Hynix nor MUFJ will have managerial say.
“Toshiba has determined that the consortium has presented the best proposal, not only in terms of valuation, but also in respect to certainty of closing, retention of employees and maintenance of sensitive technology within Japan,” it said.
Damian Thong, senior technology analyst with Macquarie in Tokyo, said the decision reflects how Japan wants to keep the technology, but concessions would be needed from Western Digital.
A fight in court would be detrimental long term, because delays would give an edge to rivals, he added. Samsung Electronics is No. 1 in the field.
“The whole point of this is to help Japan retain control of the semiconductor operations and business of Toshiba,” Thong said. “This is Japan trying to protect its position and relevance in global chip-making.” AP
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