Western Digital Corp. has demanded that it be allowed to take the initiative in operating Toshiba Corp.'s chip unit, which the Japanese conglomerate plans to sell, sources close to the matter said Tuesday.
Western Digital, which has invested in Toshiba's Yokkaichi flash memory plant in central Japan, has claimed that it has the right to block the sale of the chip business, which Toshiba has put up for sale. The Japanese government is aiming to form a consortium of Japanese and U.S. companies to bid for the unit.
During talks with Toshiba officials in Japan, Western Digital Chief Executive Officer Steve Milligan stressed that his company needs to gain control of Toshiba Memory Corp., the sources said.
The government is hoping to prevent a technology drain by having a consortium including U.S. investment funds, the Innovation Network Corp. of Japan and the state-owned Development Bank of Japan purchase the chip company.
Milligan shared concerns about a possible technology drain but did not say whether Western Digital will join the envisioned U.S.-Japan consortium, according to the sources.
The embattled Japanese conglomerate is reeling from huge losses related to its troubled U.S. nuclear unit Westinghouse Electric Co., which filed for Chapter 11 bankruptcy protection in March.
Toshiba said in March it could post a group net loss of 1.01 trillion yen ($8.9 billion) for the fiscal year ended March 31, the largest ever for a Japanese manufacturer, and fall into a negative net worth of 620 billion yen.
The compsny spun off its prized memory chip business last month, planning to sell a majority stake in the subsidiary to raise funds to cover massive losses from its U.S. nuclear business.
Toshiba is holding a second round of bidding for the chip unit this month, with Taiwan's Hon Hai Precision Industry Co., which bought Japanese display maker Sharp Corp. last year, among those interested in purchasing a stake.
