Toshiba discussing joint investment in chips with Western Digital

YOKKAICHI, Japan (Reuters) - Toshiba Corp said it is discussing joint investment in a new chip production line with Western Digital Corp - its estranged business partner after the Japanese firm chose a different suitor to buy its $18 billion semiconductor business.

After a long and highly contentious auction, Toshiba agreed last month to sell the prized chip unit to a consortium led by Bain Capital LP, overcoming a key hurdle as it scrambles for funds to cover billions of dollars in liabilities arising from its now bankrupt U.S. nuclear unit Westinghouse.

Western Digital, which became Toshiba’s chip venture partner with its acquisition of SanDisk last year, argues that any deal will need its consent and has sought an injunction with the International Court of Arbitration.

Given competition with Samsung Electronics Co, it is best to have amicable ties with Sandisk, Yasuo Naruke, the head of the flash memory chip unit told a news conference.

Representatives for Western Digital were not immediately available for comment.

Western Digital, one of world’s leading makers of hard disk drives, paid some $16 billion last year to acquire SanDisk, Toshiba’s chip joint venture partner since 2000.

It sees chips as a key pillar of growth and is desperate to keep the business out of the hands of rival chipmakers. The Bain consortium includes South Korean chipmaker SK Hynix Inc.

Toshiba said this week it would invest an additional 110 billion yen ($980 million) in the Fab 6 chip production line in Yokkaichi, central Japan, on top of a planned initial investment of 195 billion yen.