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Toshiba, Western Digital in tug of war over factory investment

Chip plant expansion hobbled by dispute over memory unit sale

Toshiba has asked Western Digital to drop its legal actions as a condition to proceed with a joint investment in a memory chip factory in Yokkaichi, Mie Prefecture.

TOKYO -- The dispute over Toshiba's planned sale of its memory chip unit is dragging on a joint factory investment with Western Digital.

Toshiba has asked its U.S. partner to drop legal actions against the Japanese electronics maker as a condition to proceed with a joint investment to expand a memory chip factory in Yokkaichi, Mie Prefecture, western Japan.

In August, Toshiba said it would proceed on its own with the first phase of the investment -- a plan to build a sixth manufacturing building at the Yokkaichi plant. Western Digital fears it could end up with no access to the advanced memory chips to be produced there, and has asked Toshiba to reconsider a joint investment. The two companies have since been negotiating the terms of the plant's second phase.

Chipmakers are increasing their capacity to meet growing demand, and production equipment is in short supply. To avoid falling behind, Toshiba urgently needs to order new equipment for its expansion. The company said it has informed Western Digital of its intention to order new equipment by the end of November.

Western Digital has been trying to block Toshiba's sale of its memory chip unit through the International Court of Arbitration. Western Digital has rejected Toshiba's request to withdraw the case as a condition for resuming joint investment, and appears to want to use the case to win concessions from Toshiba.

The latest expansion plan has been divided into several phases. Toshiba and Western Digital have in the past jointly purchased production equipment for the Yokkaichi factory, splitting the hefty costs between them.

(Nikkei)

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