CHIP DISPUTE: Toshiba, Western Digital agree to settle conflict

Toshiba Corp and business partner Western Digital Corp have agreed in principle to settle a dispute over the embattled Japanese conglomerate’s plans to sell its $18 billion chip unit, sources with direct knowledge of the talks said.

Toshiba’s board has approved a framework for a settlement and is aiming to reach a final agreement by next week, one of the sources said.

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The potential for Western Digital – Toshiba’s partner in its main semiconductor plant and jilted suitor in the long and contentious auction of the unit – to block a deal has been seen as the main obstacle to the planned sale to a consortium led by Bain Capital LP.

The settlement under discussion calls for Western Digital to drop arbitration claims seeking to stop the sale in exchange for allowing it to invest in a new production line for advanced flash memory chips that is slated to start next year, two sources said.

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