Toshiba draws back from fab foundry lock-out foolishness

Japan encouraging Tosh and WDC to come to agreement

+Comment The latest twist in the Toshiba Memory Business auction sale is that Toshiba has not barred access to the foundry or its online facilities from partner WDC employees.

The flash foundry is jointly owned by Toshiba and WDC, with Toshiba wanting to include its share in an auction of its Memory Business to raise billions of yen in a recapitalisation exercise following galactic-scale losses in its US nuclear power station building subsidiary.

WDC has put in a lower bid than leading bidders Hon Hai (Foxcon) and Broadcom, and doesn’t like either of them as putative partners for the flash foundry JV. Western Digital and Toshiba have threatened each other with legal attacks over who can and can’t agree a sale of the business and have currently entered into a process of arbitration initiated by WDC, which could stymie Tosh's efforts to sell..

Toshiba threatened to lock out WDC employees from the foundry if they turned up yesterday, and deny them online access, but hasn’t followed through on the threat.

Reuters reports a Toshiba spokeswoman saying: “We are putting on hold a decision to limit access as we continue talks toward solving the issue.”

The Japanese government is encouraging Tosh and WDC to come to an agreement while not wanting to directly intervene in the affair. Trade Minister Hiroshige Seko said: “It's very important for Toshiba and Western Digital to cooperate.”

Masako Kuwahara, a senior analyst at Moody's Investors Service, said: “While we believe that the successful sale of its chip business is indispensable for Toshiba to remain a going concern, hurdles to realising such a goal are increasing.”


There is speculation that Japanese multi-national business Sharp could join with Hon Hai to lessen the China association, which the Japanese government dislikes. Toshiba could delay its second round bid deadline to provide more time for bidding consortia to form and for the talks with WDC.

WDC is said to want a JV partner who could afford the investment needed to keep the fabs operating at the front edge of NAND development, as 64-layer NAND chip production increases and increased chip layers are developed, such as a 128-layer chip. A financially strapped Toshiba might not be capable of this, and any other JV Partner would need to meet that criterion as well as others to be accepted by WDC. ®

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