Toshiba wrangles with Western Digital over chips unit sale

In this photo, April 11, 2017, Toshiba Corp.’s President Satoshi Tsunakawa bows during a press conference at the company’s headquarters in Tokyo. Money-losing Japanese electronics company Toshiba is sparring with its US joint venture partner Western Digital over the planned sale of Toshiba’s computer-chip business. Toshiba warned Western Digital to stop interfering, according to letters seen Tuesday, May 9, by The Associated Press. The letters from the company’s lawyers, dated May 3, accused Western Digital of “improper” interference. (Photo by SHIZUO KAMBAYASHI / AP)

TOKYO — Money-losing Japanese electronics company Toshiba is sparring with its US joint venture partner Western Digital over the planned sale of Toshiba’s computer-chip business.

Tokyo-based Toshiba Corp. needs cash from such a sale to shore up its finances after it suffered massive losses in its nuclear power division.

Toshiba warned Western Digital to stop interfering, according to letters obtained Tuesday by The Associated Press. The letters from the company’s lawyers, dated May 3, accused Western Digital of “improper” interference.

Western Digital bought SanDisk, Toshiba’s longtime partner in making flash memory chips, last year. It has argued the sale might violate terms of the joint venture with Toshiba, according to the letters.

Such sales can be sensitive because they involve the transfer of technology.

Calls to Western Digital in Asia went unanswered.

Several companies, including Western Digital, are reportedly interested in acquiring Toshiba’s prized chip-making business. Another is Hon Hai of Taiwan, also known as Foxconn, a major supplier to Apple, which has acquired Japanese electronics company Sharp Corp.

South Korea’s SK Hynix is also reportedly a bidder. A Japanese consortium including government-affiliates like the Development Bank of Japan and the public-private Innovation Network Corp. of Japan are said to be preparing a bid with US private equity firm Kohlberg Kravis Roberts. The financial newspaper Nikkei reported last month that Western Digital might join that effort.

Toshiba is projecting a trillion yen ($9 billion) in losses for the fiscal year that ended in March, although auditors have refused to sign off on its earnings report. The company is also embroiled in an accounting scandal.

Further raising doubts over its future viability, Toshiba’s US nuclear unit Westinghouse Electric Co. filed for bankruptcy protection in March.

Four nuclear reactors that Westinghouse is helping to build in South Carolina and Georgia are behind schedule and billions of dollars over budget, as costs soar after the nuclear disaster in Fukushima, northeastern Japan, six years ago.