Toshiba, WD Settle Dispute, Extend JV

　　Toshiba and Western Digital announced a deal to settle all ongoing litigation and arbitration, extending their existing partnership and NAND flash development and manufacturing.

　　The deal, which was expected this week, extends the joint venture agreements between the firms to 2027 and beyond and gives WD the right to fully participate in Toshiba Memory's Fab 6 at its Yokkaichi Operations site, which will be devoted to the mass production of bit cost scalable BiCS 3D NAND.

　　"It's really a very positive thing," said Jim Handy, principal analyst at Objective Analysis, of the settlement.

　　Walter Coon, an analyst and director for technology, media and telecom at IHSMarkit, said a settlement of the dispute was in the best interest of both parties. "From the WD perspective, they had to get resolution to this [to secure future supply of NAND]," Coon said. "In the long term, even if they felt like they would prevail in the courts, I think the risk was too high."

　　WD had maintained that the joint venture agreements between Toshiba and SanDisk — which WD acquired in 2016 — required Toshiba to seek WD's approval before it could sell its memory chip business. Toshiba announced in September that it reached an agreement to sell its memory chip business, Toshiba Memory, to a consortium led by private equity firm Bain Capital for $18 billion.

　　WD had sought to acquire Toshiba's memory business when the Japanese conglomerate announced it would sell to offset massive losses incurred by its U.S. nuclear power business. But Toshiba repeatedly said it preferred other bids, reportedly owing to the Japanese government's desire to keep Toshiba's technology in Japanese hands. The structure of the Bain-led consortium — which also includes state-backed entities Innovation Network Corp. of Japan (INCJ) and the Development Bank of Japan, in addition to Hoya, Apple, Dell and South Korean memory chip vendor sk Hynix — means that Toshiba Memory will be more than half owned by Japanese entities.

　　Western Digital initiated legal action in June to block the sale, an event which started a volley of litigation between the firms that threatened to undermine the sale to the Bain-led consortium.

　　Both Toshiba Memory and Bain were also involved in the settlement deal announced Tuesday, WD said.

　　"This agreement is a win for all parties," said Steve Milligan, WD's CEO, in a conference call to discuss the settlement on Tuesday. Milligan and other executives said WD hadn't wanted to initiate legal action, but did so only after they felt their concerns were not being heard by Toshiba.

　　Handy said that Toshiba, after being rocked by an accounting scandal last year and reporting huge losses at its Westinghouse U.S. nuclear power subsidiary earlier this year, was reeling. "Toshiba was trying to do triage to the extent that they weren't giving the time and attention to WD that they thought they deserved," Handy said.