Western Digital Brings Legal Conflict With Toshiba To ICA Over Sale Of Microchip Business

More chip manufacturers are becoming embroiled in legal battles. After Qualcomm’s ongoing lawsuit against the Federal Trade Commission and Apple, another chipmaker is headed for the court. Western Digital elevated on Sunday its trade dispute with Japanese microchip maker Toshiba to the International Court of Arbitration.

The issue is Toshiba’s planned sale of its $20-billion microchip business which Western Digital Corp., a part-owner of the Toshiba semiconductor company, is questioning. Western Digital insists that Toshiba needs its permission before the Japanese giant could sell the business, The New York Times reports. The ICA has the power to adjudicate disagreements between partners.

Western Digital elevated the dispute to the international tribunal because it could not resolve the matter despite efforts to reach a resolution, Stephen Milligan, chief executive of Western Digital, explains. The company insists that Toshiba, which has solicited bids for its microchip business, would be violating legal agreements if it sells the unit without Western Digital’s approval.

But Toshiba claims the sale was being done properly, and it has not broken any of its contracts with Western Digital. Bizjournal notes that the case could derail or postpone the sale of the microchip business which Toshiba badly needs to succeed due to huge losses in the company’s nuclear power division. It notes that a lot of the bidders are competitors of Western Digital.

ICA’s arbitration would be in San Francisco. Toshiba and Western Digital would propose a member of the three-member panel that would adjudicate the case. Despite Western Digital’s legal initiative, Toshiba says it would go ahead with the sale of its microchip unit.

According to Reuters, the bidding has attracted Foxconn of Taiwan, Broadcom in the U.S., and KKR & Co. LP, a private equity firm. Toshiba’s microchip business is the second-largest NAND chip manufacturer in the world. The report claims Western Digital placed in a much lower offer than the other bidders.