This article is more than 1 year old

Toshiba's spat with WDC over chip biz is now a song of strife and ire

Court orders only prolong bid process, and winter is coming

Toshiba regained a right to lock WDC (SanDisk) employees from their joint-venture fab in Yokkaichi, Japan, reversing WDC's court-obtained Temporary Restraining Order, which was won earlier this month.

Toshiba, in dire need of billions of yen through nuclear power station-building misadventures in the USA, is trying to sell its side of the NAND chip joint venture (JV) it operates with WDC, which bought SanDisk, Tosh's original partner.

WDC says it has veto rights over such a sale. Toshiba says it ain't so, and is suing WDC for a billion dollars in trying to hold up the sale, and also locked SanDisk employees out of the plant and prevented WDC staff getting online access to some JV databases. That spurred WDC on to get its TRO from the Superior Court of California, overturning he lockout and restoring online access.

So Tosh appealed to the California Court of Appeals, which issued a temporary stay order, but WDC is filing an appeal, as you do in such multimillion-dollar corporate lawsuit legal lotteries, and hopes to reverse the reverse of its restraining order ruling out the lockout. Clear?

Earlier this week, WDC CEO Steve Milligan went to Japan to meet Japanese government officials and discuss the sale and WDC's own bid for the business. So far it has made six bids, which Tosh has tossed, preferring other bids featuring partners WDC does not like, such as trade secret robber and flash chip competitor SK Hynix.

The Japanese government has said its wants Toshiba's JV IP and jobs to stay in Japan.

As well as fighting a legal war, Toshiba and WDC are locked in PR combat, presenting their wins as triumphs and the other's as irrelevant or trivial. So WDC explains that the appeal court issued its stay order based solely on a Toshiba brief and will file its rebuttal in a day or so.

Using very lawyer-like distinctions, it says Tosh's attempt to get a stay on the TRO is a separate issue from its appeal to have the TRO toppled, and so we shouldn't assume Tosh's bid for that is more or less likely to succeed because it won its stay.

If WDC succeeds in keeping its TRO in force then Tosh will have to endure, WDC hopes, going through the lengthy travails of an arbitration procedure to see whether WDC is right to claim it has veto rights on the sale. Such arbitration could well take longer than the time Toshiba has left to get the needed cash and prevent Tokyo stock exchange delisting and a financial calamity. This could or would force Toshiba to sell its JV interest to a WDC bid consortium. ®

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