No chips for you! Toshiba takes flash off the menu for WDC The Toshiba vs. Western Digital flash foundry scrap has gone up a notch, with the former threatening to cut off the latter's future flash chip supplies. The scrap started when Toshiba decided to go it alone on a ¥195bn ($1.76bn) plant named "Fab 6" that will make 96-layer 3D NAND manufacturing equipment. Western Digital (WDC) …
The problem with your idea is that in that case neither company was on the ropes. Toshiba figures it's fighting for its continued existence, meaning no holds are barred. That's why the fight with WDC is so ugly; Toshiba figures ANY move by WDC is just an inroad to a buyout, and Toshiba would prefer anyone else to buy them.
Very delicately put. I would characterise more forcefully. WDC has a forked decision to make: either it buys Toshiba cheap - because it paid too much for SanDisk - thereby becoming a serious full scale player in the flash market, or it is sold to someone else. If that happens, that they scale up instead - and WDC whithers on SanDisk's diminishing niche flash and its own spinning rust businesses.
And Toshiba don't want to sell to "anyone", as this includes Chinese or allied companies and Toshiba (or their government) don't want to transfer technology in that direction. Nobody "suitable" seems to have the money that Toshiba want. And notwithstanding all this, don't under estimate the fact that WDC think that they can get the flash business on the cheap - especially given the current political climate in the US.
I suspect Toshiba would have sold if WDC had made a sensible offer. Now it could be "not WDC at any price".
"And Toshiba don't want to sell to "anyone", as this includes Chinese or allied companies and Toshiba (or their government) don't want to transfer technology in that direction."
Except an acceptable offer has already been made: by a consortium that has the blessing (and backing) of the Japanese government. If Toshiba were allowed to take the offer, everything can stay home and they can wind down more at peace. But WDC sued to block the offer because they want in.
NOTHING'S clear if a litigant doesn't want it to be. Lawyers could argue the meanings of Newspeak words (read: as objective and concise as possible) if they felt it gave their client an edge. They'll argue no means yes, buy means sell, that the butter is blue, and say it with absolute confidence and a straight face.
Without seeing the contracts it's hard to know for sure, but if I had to guess then I'd say WD is probably the one acting in bad faith here and that Toshiba is doing the right thing carrying on without them.
If WD had had the funds on hand to buy Toshiba out there would be no dispute, but because WD were overstretched with the Sandisk acquisition at the time they had to resort to using their lawyers tactically instead.
It's no secret that Toshiba need the cash, but what WD really need is no new cash-rich competitors entering the lucrative flash market and this is the real motivation behind why WD are so very desperate to block the sale of Toshiba's flash assets to anyone but themselves. Deliberately misinterpreting the terms of their contract with Toshiba may have been WD's only play at the time but it was always a risk that it would blow up in their faces like this.
From the very brief details in the article, it doesn't seem that there necessarily is any disagreement. All WD are asserting is that SanDisk has "priority" to participate and Toshiba are saying they are proceeding alone. Those positions do not appear to conflict. You cannot have "priority" unless there are others to be prior to. Ergo the question only arises if Toshiba solicit external investment (which they aren't).
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