Toshiba and Western Digital have dropped their legal battles

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Western Digital will also be able to participate in the flash fab planned for construction in Iwate.

While the joint venture continued, Toshiba and Western Digital have been at loggerheads ever since.

Milligan said the Western Digital-Toshiba joint venture is necessary for his company to manufacture NAND flash, a key asset as flash becomes a large part of enterprise and consumer storage. As SK Hynix and Micron began sniffing around the possibility of a share in the resultant new company, however, Western Digital grew antsy - and when Toshiba picked the company's rivals as the winning bidders WD sought to halt the sell-off altogether, claiming that it broke the terms of a joint venture agreement Toshiba had signed with its SanDisk subsidiary prior to WD's acquisition of same.

It might have to clear further hurdles, such as possible anti-trust concerns.

Western Digital managed to gain major concessions through its hard bargaining, but the lucrative nature of the partnership apparently brought the company to the negotiating table. Toshiba also remains on track to complete our transaction with the consortium led by Bain Capital by the end of March 2018.

The struggling Japanese conglomerate said Wednesday that it had settled a legal dispute with Western Digital, the USA data storage company, that threatened to block the microchip deal.

The settlement calls for Western Digital to drop arbitration claims seeking to stop the sale to the Bain consortium in exchange for Toshiba allowing the USA partner to invest in a new production line for advanced memory chips.

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He said the plan would ensure TMC has the resources it needs to compete in the flash memory market, which is growing quickly with advances in artificial intelligence and networks for products that have Internet connections, known broadly as the Internet of Things. Toshiba is seeking to sell its profitable flash-memory unit as part of an effort to avoid having its stock delisted in Japan due to struggles at its US nuclear subsidiary, Westinghouse.

Toshiba was under heavy pressure to sell the chip unit in order to cover massive losses from its nuclear division and avoid having its stock delisted from Japan's stock exchanges. Toshiba sued WD for damages related to its attempts to block the deal, and even after inking the deal it found that WD was still blocking the agreement.

The prospect that Western Digital's legal challenges might derail the sale to Bain was daunting for Toshiba, but Toshiba possessed leverage of its own.

Western Digital said it expects revenue for the December quarter of $5.3 billion, above analyst estimates for $5.28 billion, and adjusted earnings of $3.80 per share, vs. forecasts of $3.67.

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