Toshiba warns Western Digital on interfering with chip unit sale

Toshiba has swung onto the offensive in its legal dispute with Western Digital, warning the US firm to stop interfering in the estimated $20bn sale of its memory chip business – a deal critical to the future of the struggling Japanese giant.

The warning is Toshiba’s strongest retort to date in a spiralling legal battle over whether the Japanese company’s right to sell its chip business is restricted by the terms of its joint venture with Western Digital.

In a letter threatening litigation against Western Digital, Toshiba’s lawyers accused the US firm of mounting an improper campaign of “intentional interference” with Toshiba’s attempt to sell its chip business.

The escalation of language came after Western Digital demanded exclusive negotiation rights in a letter sent to Toshiba’s board in early April, where it argued that the sale of the chip venture without its consent would be a breach of their joint venture agreement.

Toshiba has rejected that argument, and in a dramatic intensification of hostilities, has threatened to block Western Digital employees from all Toshiba premises and databases involved in the chip making joint venture. The lockout could begin as early as next Monday.

The warning was issued in a letter sent on May 3 from the general manager of Toshiba’s legal affairs to his opposite number at Western Digital and accuses Western Digital of creating “operational issues” for the joint venture.

The Toshiba letter demands that Western Digital honour the agreements underpinning the joint venture.

“If Western Digital refuses, Toshiba Memory Company will have no choice but to protect its intellectual property rights by suspending Western Digital employees’ access to all TMC facilities, networks and databases,” the letter said.

In a separate letter sent by the law firm representing Toshiba in the sale of the chip business, it said the consent of SanDisk, Toshiba’s original partner who was acquired by Western Digital last year, is not required for the the transfer of stakes in the joint venture.