Toshiba Corp. is getting close to completing the sale of its memory chip business, and U.S. computer storage company Western Digital Corp. still isn’t happy about it.

For several months, Western Digital has argued that Toshiba cannot sell its memory business to a third party without permission because the segment includes joint ventures with Western Digital’s subsidiary, Sandisk. Western Digital already filed for arbitration with Toshiba in May, but now a more serious legal battle between the two companies is looking more likely.

Western Digital is particularly concerned that Toshiba’s preferred bidding consortium includes rival chip maker SK Hynix Inc. On Sunday, Western Digital Chief Executive Stephen Milligan sent a letter to Toshiba expressing concerns that SK Hynix will gain access to proprietary information about Western Digital’s technology through its joint ventures with Toshiba.

“I must make it clear that Western Digital will not consent to a transaction with the proposed consortium,” Milligan said in the letter, according to Reuters. He added that the current situation with Toshiba’s deal “would make further litigation inevitable.”

Western Digital has also stated that Toshiba’s preferred bid of $18 billion is equivalent to its own offer, but Toshiba reportedly passed of the American company’s offer because it wanted to take full control of the memory business. Meanwhile, according to Toshiba, SK Hynix will not be holding any equity and will not be involved in the management of the business.

While Western Digital has been unable to block Toshiba’s deal directly, the company’s concerns may be one reason that the sale has been delayed. Toshiba originally announced that it intended to finish negotiations for the deal this Wednesday, when it will hold its annual shareholder meeting, but now Toshiba may have pushed back its self-imposed deadline. According to a report by Bloomberg, some of Toshiba’s potential investors are taking time to conduct their due diligence in the semiconductor sale, partly because of Western Digital’s claims.

On Friday, Toshiba Chief Executive Satoshi Tsunakawa said that he was open to talks with Western Digital, but in light of Milligan’s letter, a talk may not be enough to prevent legal action. Western Digital filed for an injunction against Toshiba in the U.S., and it expects a ruling from the court on July 14.

Photo: Toshiba