TOKYO -- Toshiba's 10-month feud with Western Digital damaged the global market share of both companies in the flash memory business, granting a bigger edge to mutual rival Samsung Electronics as the pair work to repair relations.
Toshiba and its American partner agreed Wednesday to bury the hatchet over the Japanese technology group's planned sale of its newly formed subsidiary Toshiba Memory. Their settlement will let the unit accelerate growth to meet global flash memory demand, Toshiba Memory President Yasuo Naruke said in a news release.
"We look forward to building upon the success of our 17-year partnership," Western Digital CEO Steve Milligan said in response.
The pair will invest jointly in Fab 6, the latest addition to their production complex in Yokkaichi, a city in western Japan. That facility will mass-produce 96-layer 3-D flash memory, the next-generation offering. Toshiba and Western Digital also intend to partner on a new plant in Japan's Iwate Prefecture expected to cost over 1 trillion yen ($8.83 billion).
But both companies dug themselves into a hole with the dispute, which began in February when the U.S. hard disk drive maker claimed the Toshiba Memory sale would violate their joint venture agreements.
Employees at Toshiba's Ofuna branch office in Yokohama, which also houses Western Digital engineers, have voiced concerns since summer about development delays, caused largely by Toshiba's refusal to share technological data with Western Digital amid the dispute.
"We're at a critical moment in seeing whether or not we'll catch up to Samsung," one worker said. "This is no time to have a falling out."
The growing sophistication of smartphones has led to a shortage of memory chips, and memory manufacturers have started to engage in a scramble for production equipment. Toshiba Memory was subject to frequent requests by equipment producers to submit orders "quickly," but the unit struggled to make timely decisions.
Meanwhile, global memory leader Samsung committed new money this summer equivalent to over 1 trillion yen, using the war chest to order advanced fabrication equipment. The South Korean company captured 39% of the international memory market during the July-September quarter, up 2.1 points from a year earlier, data from IHS Markit shows.
Runner-up Toshiba took a 16.8% share during the period, down 2.7 points. Western Digital owned 15.1%, off 0.4 point from the year-earlier quarter.
Toshiba will need to rebuild the joint framework with Western Digital, but whether the two can recover from frayed relations and truly join forces remains an open question.
"They burned us multiple times," a senior Toshiba executive said of the U.S. partner. "Deep down, I cannot forgive them." Both companies also butted heads over production plans for the 96-layer memory chips.
Once the consortium led by U.S. equity group Bain Capital finalizes the purchase of Toshiba Memory, the web of interests will become more complex. South Korean chipmaker SK Hynix is part of the consortium, as are Apple and three other U.S. tech firms. Innovation Network Corp. of Japan, a public-private fund, is also a stakeholder. The ability of these parties to coordinate on business strategy will make or break the memory fortunes of both Western Digital and Toshiba Memory.