Orange County Business Journal

WD Bids on Toshiba Unit

Chris Casacchia Wednesday, February 8, 2017

Irvine-based storage products maker Western Digital Corp. has placed a bid for a minority stake in Toshiba Corp.’s flash memory business, according to media reports.

Speculation has been building for weeks as the Tokyo conglomerate faces staggering write-downs from its failing U.S. nuclear power business and needs a cash infusion.

Western Digital has not responded to inquiries from the Business Journal confirming the reports.

Prior reports in Japan indicated that WD could bid on 20% of Toshiba’s memory chip business, a stake valued between $1.8 billion and $2.6 billion.

The companies have been strategic partners for more than a decade, and last year through a joint venture established a 297,000-square-foot flash memory manufacturing plant in Yokkaichi, Japan.

A majority of Western Digital’s NAND-flash memory is primarily supplied through its business ventures with Toshiba, according to its annual report. NAND flash is the most popular rewritable memory chip used in USB drives, cameras, iPods, smartphones, tablets and other devices.

Western Digital is the world’s largest disk drive maker in revenue and units sold. It posted sales of nearly $13 billion in the 12 months through June, the end of its fiscal year.

Its shares are down 2.5% in afterhours trading to a market value of about $22 billion.

The latest development comes as Toshiba’s newly acquired U.S. nuclear-energy unit faces charge-offs between $4.3 billion and $6.1 billion, according to news reports, significantly higher than the company’s earlier estimate of $87 million.

Toshiba recently received downgrades from Moody’s and Japanese credit rating firm R&I, warning of its negative equity position. The combined factors have jeopardized its listing on the Tokyo Stock Exchange, where it has traded since the exchange was established in 1949.

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