News Stay informed about the latest enterprise technology news and product updates.

Western Digital CEO vows to block Toshiba NAND sale

Western Digital CEO Steve Milligan said he remains confident his company will win its fight to prevent its NAND manufacturing joint venture partner Toshiba from selling its memory chip unit without Western Digital’s consent.

Toshiba has agreed to sell its chip unit to a group led by Bain Capital despite Western Digital’s opposition to the deal. Western Digital is trying to block the proposed $18 billion Toshiba NAND sale, claiming it violates terms of its joint venture with Toshiba.

“It continues to be our position that the transaction is not permitted without our consent. That leads to where we are today,” Milligan said during Western Digital’s earnings call Thursday night.

Western Digital gained its stake in the joint venture when it acquired flash manufacturer SanDisk, which already had the joint venture agreement with Toshiba. But when Toshiba decided to put its memory business up for sale earlier this year, it looked at groups outside of Western Digital. Earlier this month, Toshiba said it would sell to the Bain consortium. That group includes Western Digital competitors Seagate, Kingston Technologies and SK Hynix, along with its customers Dell and Apple. Toshiba will retain a stake in the NAND unit if the deal goes through.

Milligan predicted Western Digital will “ensure the longevity and continued success of the joint venture,” either through arbitration or negotiation with Toshiba. And he advised: don’t believe everything you read about the dispute over the Toshiba NAND sale, unless it comes from Western Digital.

“We are confident in our fact-based legal positions, and our right to injunctive relief,” he said.

Western Digital claims the joint venture prevents Toshiba from working with other companies to manufacture NAND, or to transfer interests in the joint venture without Western Digital’s consent.

Milligan said it may take until 2019 to gain a final ruling on the Toshiba NAND sale from the International Court of Arbitration. However, he hopes SanDisk will win temporary injunctive relief by early 2018. That relief would prevent Toshiba’s planned NAND sale to the Bain group. Western Digital has made three requests for relief with the arbitration court in 2017. Each arbitration will be decided by a three-person tribunal. Western Digital has also sought arbitration to try to prevent Toshiba from moving ahead with its Fab 6 production plant without SanDisk involvement. Toshiba opened that new production center in August on its own.

Milligan said SanDisk’s consent rights “are clear and explicit” and will hold up legally, although he would rather not have to go that route.

“Just to be clear, we do not undertake litigation lightly,” he said. “We are not litigious. And it should only be a last resort, especially in the context of this joint venture relationship.” He said Western Digital is open to any reasonable terms proposed by Toshiba, but “we will not agree to terms such as SanDisk unilaterally waiving or negating its consent.”

In an interview with Bloomberg this week, Bain managing director David Gross-Loh accused Western Digital of misrepresenting its rights in its legal challenge to the Toshiba NAND sale. He also urged Western Digital to reach an agreement with Toshiba to allow the deal to proceed.

Milligan said there has been “a great deal of misinformation provided into the marketplace through various channels” about the situation. “Western Digital will continue to communicate consistently and transparently,” he said.

When asked if he had alternative plans if Western Digital is unsuccessful in arbitration, Milligan said current supply agreements will give his company NAND through 2029.

Start the conversation

Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

-ADS BY GOOGLE

SearchSolidStateStorage

SearchCloudStorage

SearchDisasterRecovery

SearchDataBackup

Close