NEW YORK – A U.S. court on Tuesday ordered Toshiba Corp. to stop blocking Western Digital Corp.’s access to databases of their chip joint venture, as the business partners engage in an ongoing dispute over the Japanese company’s plan to sell its memory unit.
The temporary order by the San Francisco County Superior Court comes after Toshiba blocked Western Digital’s access to chip development data in their joint operations last month.
Toshiba, reeling from massive losses stemming from the bankruptcy of its former U.S. subsidiary Westinghouse, hopes to sell Toshiba Memory Corp. to raise cash, while Western Digital says the planned sale would violate their joint venture contract.
The court said Western Digital’s chip business unit SanDisk Corp. has shown that “serious irreparable harm will occur unless an injunction is granted.”
A further hearing will be held July 28, according to the court.
Western Digital is separately seeking a preliminary injunction against the sale of Toshiba Memory in a California court where a hearing is scheduled July 14.
Toshiba has filed a damages suit against Western Digital for attempting to block the chip business sale.
At the same time, Toshiba is continuing talks with Western Digital and others about the sale of Toshiba Memory, according to people with knowledge of Toshiba’s meeting with creditor banks Tuesday.
Apart from the legal cases, Toshiba has told its creditor banks it is in talks with Western Digital and Taiwan’s Foxconn over the sale of its chip unit in addition to its preferred bidder, banking sources said in Tokyo .
The company confirmed it was in talks with other suitors, as it had not been able to reach an agreement by its self-imposed deadline of June 28. It did not name the suitors.
Toshiba’s preferred bidder group includes the state-backed fund Innovation Network Corp. of Japan, the Development Bank of Japan, U.S. private equity firm Bain Capital and South Korean chipmaker SK Hynix Inc.
But talks have struggled to progress, according to sources, due to SK Hynix’s proposal that its financing be done via convertible bonds — a step that would provide it with a path toward an equity interest in the world’s No. 2 NAND chipmaker.
Toshiba is keen for its South Korean rival to have no equity or management influence in the chip unit — a stance it has taken to satisfy a government that wants the business to remain under domestic control and for key technology to be kept out of the hands of foreign rivals.
The banking sources declined to be identified as they were not authorized to speak on the matter. A representative for Western Digital also declined to comment.
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