Toshiba raises dread spectre of working with SK Hynix on flash fab
Hooo boy, WDC. You've really done it now
Toshiba could partner with SK Hynix on flash foundry operations, implying the WDC joint venture could have a finite shelf life.
More details have emerged of the latest flash foundry talks between WDC and Toshiba.
Toshiba is building Fab 6 at Yokkaichi, Mie Prefecture, to increase 3D NAND chip production so that it becomes 90 per cent of the Yokkaichi output in Toshiba's next fiscal year. The company had said it was investing in Fab 6 on its own but WDC argued the joint venture terms mean it can, and should, invest as well, and has gone to court to force its way in.
As reported in the Nikkei Asian Review, WDC and Toshiba are talking about WDC participating in a second investment round for Fab 6 development. Toshiba Memory Business president Yasuo Naruke said about investing with WDC: "If we can invest together we can take advantage of economies of scale. There are many problems, including the legal dispute, but we want to work on mending fences quickly."
The legal dispute is wider than the Fab 6 investment. It covers WDC's claim that Toshiba cannot sell its memory business, which holds the joint-venture stake, to a Bain Capital-led consortium, which includes WDC competitors Kingston Memory, SK Hynix and Seagate.
There is land being prepared nearby for another new Yokkaichi foundry, Fab 7, as Toshiba anticipates a prolonged and increasing need for flash memory. But it may not be available for the WDC joint venture, unless there is a compromise.
Naruke said any cooperation with flash maker SK Hynix would be separate from the Yokkaichi foundry operations with WDC, and SK Hynix could not invest in the Yokkaichi foundries. If WDC's arbitration court procedures somehow prevent joint investment by Toshiba and WDC in Fab 6 then, Naruke said, WDC will lose its access to the 96-layer 3D NAND to be produced by Fab 6.
But he added: "I think we can reach a compromise somewhere... Two would undeniably be better than one to compete with Samsung."
Toshiba is also intending to build another foundry at Kitakami, in the Iwate Prefecture, and that would appear to be separate from its joint venture with WDC.
What is WDC's problem? Its strategy and tactics for dealing with the Toshiba Memory Business sale have led it to this place, where Toshiba is threatening to start working with SK Hynix. It would then start competing with WDC while still operating the Yokkaichi foundries, but, potentially, keeping WDC out of the Fab 6 area and any future flash technology developments.
WDC is being cast in the light of an obdurate and stubborn partner who can't see the forest for the trees. It's getting to the point where one might be excused for thinking that a change at the top would be needed to get WDC talking sensibly and cooperatively with Toshiba. ®