April 12, 2017 / 7:19 AM / 9 months ago

Western Digital says Toshiba chip unit sale violates joint venture contract

TOKYO, April 12 (Reuters) - Western Digital Corp has warned Toshiba Corp that splitting off its chip unit prior to a planned sale of the business violates their joint chip venture contract.

Western Digital, which operates a chip plant with Toshiba in Japan, said the split-off is “very serious breach of joint venture agreements,” according to a letter sent by the California-based company to Toshiba and seen by Reuters.

The objection is likely to complicate the sale of the prized unit - the world’s second-biggest producer of NAND chips which Toshiba has valued at around $18 billion.

Toshiba, which expects to book an annual net loss of 1 trillion yen ($9 billion) for this business year on a writedown at nuclear unit Westinghouse, has said it is selling most or even all of the chip business to help cover the charges and create a buffer for future losses that threaten the conglomerate’s future. (Reporting by Makiko Yamazaki; Editing by Edwina Gibbs)

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