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(Image courtesy of Toshiba).

Toshiba Locked in Negotiations Over Memory Chip Unit

Toshiba cleared the air on Thursday about the ongoing sale of its memory chip business. Still in the running are groups led by Western Digital, Foxconn, and Bain Capital along with two Japanese state-backed funds.

Toshiba said that none of the bidders had taken pole position in the auction: “At this point, Toshiba has not made any decision to reduce the pool of candidate purchasers,” the company said in a statement. “The negotiation with each consortium has not reached a point which will allow Toshiba’s board of direction [to] make a decision.”

Western Digital remains in contention despite months of brawling Toshiba in court over the fate of the world’s second largest memory business. In recent months, the legal battles have spilled out into public view and hampered the auction, in which the top spot at the negotiating table has changed constantly.

Western Digital has been pouring on legal pressure since Toshiba announced the sale of its memory business to patch losses in its American nuclear power unit. Western Digital claims that it has final say on any deal since it shares ownership with Toshiba on a memory chip plant in Yokkaichi, Japan.

Toshiba disagrees, and it has attempted to cut out Western Digital from the chips produced in the factory. The company said that it alone would invest around $1.75 billion into clean room equipment for the new factory, which will manufacture 3D NAND flash to meet growing worldwide demand. Western Digital says that it will not be forced out.

The announcement does not mention Apple, which Bloomberg reported on Wednesday is in talks with Bain Capital to submit an additional bid. Bain previously led a $19 billion bid in cahoots with SK Hynix, Innovation Network of Japan, and Development Bank of Japan, according to Bloomberg.

In June, Reuters reported that this group was Toshiba's preferred bidder. But that apparently changed on Monday when Reuters reported that Toshiba would accept a $17.4 billion bid submitted by Western Digital, American private equity firm Kohlberg Kravis Roberts, and the two state-backed funds also allied with Bain.

The recent announcement heaps more confusion onto the auction. Toshiba said that it is still seeking a buyer “to promote further growth of TMC’s memory business, while also being capable of contributing enough value from the sale of TMC to return Toshiba to positive equity.”

“The memory business requires timely investments, accelerated product development, and the ability to quickly ramp-up large-scale production capacity,” Toshiba added in the statement on Thursday. “Highly reliable memory devices are essential to meet growing demand for storage.”

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