Why Toshiba Can't Forget Its Memory Problem: QuickTake Q&A

Cash-strapped Toshiba Corp. needs to sell its memory chip business, and quickly. Trouble is, Western Digital Corp., its partner in a key manufacturing joint venture, doesn’t want a competitor to gets its hands on the crown jewel of Toshiba’s sprawling conglomerate. Western Digital is incensed with the way the Japanese company is going about the divestment and has asked a U.S. court to block any sale while the two resolve their differences.

The dispute centers on the terms of their joint-venture agreement and Western Digital’s legal rights to have a say in the sale. Western Digital inherited the partnership when it purchased SanDisk Corp. last year. Toshiba says the U.S. company failed to formalize its relationship with Toshiba after that purchase. Western Digital has asked a California court to block a sale of the unit while it seeks arbitration over Toshiba’s moves to transfer assets of the joint-venture -- first to a separate legal entity, and then to its parent company.