Toshiba to invest alone in new plant as talks with US partner stall

TOKYO (Kyodo) — Toshiba Corp. said Thursday it will be the sole investor in a new chip plant in central Japan after failing to agree with Western Digital Corp. on jointly investing in the project amid an escalating spat between the two companies.

In a statement released Thursday, Toshiba said it “failed to reach (an) agreement” with the U.S. joint venture partner on how to share outlays in the Fab 6 facility currently under construction at its Yokkaichi chip plant.

Toshiba said it expects demand for its chip memories to “increase significantly” and said it “will continue to make timely investments to expand operations.”

The financially troubled Japanese conglomerate said it will spend roughly 195 billion yen ($1.76 billion) in the new facility in Mie Prefecture, up from some 180 billion yen announced in late June.

The crisis-hit manufacturer is scrambling to raise cash through a quick sale of its chip unit Toshiba Memory Corp. to cover massive losses stemming from its now-bankrupt U.S. nuclear unit. The company will face delisting from the Tokyo Stock Exchange unless it eliminates its negative net worth by next March.

In June, Toshiba picked a consortium including state-backed Innovation Network Corp. of Japan, the state-owned Development Bank of Japan, U.S. investment fund Bain Capital and South Korean chipmaker SK Hynix Inc. of South Korea as the preferred bidder for Toshiba Memory.

But negotiations have stalled after SK Hynix demanded voting rights in the chip unit instead of only providing loans to a fund in the consortium as initially planned.

Claiming any sale without its consent breaches their joint venture contract, Western Digital has taken its row with Toshiba to court.

Last week, the court in San Francisco ordered Toshiba to give Western Digital two weeks’ notice before closing the sale of its flash memory business after the U.S. company sought an injunction to stop the sale process.

The legal dispute is scheduled to be examined by an international arbitration court between September and October.

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