Tuesday, 24 October, 2017

SK Hynix set to invest in Toshiba chip unit, details consortium's plans

Western Digital is expected to lose ground in the NAND flash market as it failed to acquire Toshiba memory business Western Digital is expected to lose ground in the NAND flash market as it failed to acquire Toshiba memory business
Sammy Stanley | 28 September, 2017, 00:22

SK HYNIX will invest ¥395bn ($3.5bn) in Toshiba Memory Corporation to help finance the Bain Capital-led consortium buying out the Japanese semiconductor company.

On Monday Patently Apple posted a report titled "The Toshiba Deal with Bain Capital may have to be restructured to get Apple and SK Hynix to Sign on". An independent arbitration panel is set to be formed in the coming days, and an injunction could come later this year. A final ruling on the dispute is not expected before 2019.

Toshiba filed for bankruptcy earlier this year after booking massive losses related to its US nuclear operations at Westinghouse Electric. If it fails to do that, it could be delisted. Western Digital expects a decision on the injunction between December and January, well before Toshiba's March 2018 target for completing the sale.

The consortium was selected to buy Toshiba's computer chip unit for 2 trillion yen ($18 billion) last week, but the deal's future remains unclear because Toshiba's US joint venture partner Western Digital opposes it.

At some points during the nine-month auction process, the consortium backed by Western Digital and which also includes KKR & Co had looked liked it was the front-runner to win.

The money Toshiba will get from selling its flash chip business will, hopefully, prevent that.

Toshiba will not be able to sell off its memory business until the International Arbitration Court comes to a conclusion about the arbitration lawsuit filed by WD in May of this year if and when the court rules in favor of WD's injunction against the sell-off. Toshiba had said it would invest unilaterally in equipment for a new NAND fab at its Yokkaichi operations site, shutting out Western Digital's SanDisk subsidiary, Toshiba's partner in NAND flash development and manufacturing for the past 17 years.

WD, a joint venture that runs a Toshiba semiconductor plant located in the city of Yokkaichi, Mie Prefecture of Japan with Toshiba, wanted to take over Toshiba Memory but failed and applied for an injunction against the sell-off of the semiconductor business to the global court in May. Toshiba has resorted to retaliatory actions against its JV partner to try to coerce SanDisk to surrender its consent rights, including its lockout of Western Digital employees in June and its attempt to exclude SanDisk from certain capacity investments - neither of which has any legal basis.

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