Toshiba Corp. (OTC:TOSYY) (OTC:TOSBF), teetering on the brink of death after an ill-fated foray into nuclear power, has no shortage of suitors for its lucrative flash memory chip unit, the second-biggest seller of the tech used in cellphones and many other electronics.

The auction, which one analyst said involved four competitors, could get ugly.

4 Players

Reuters reported Wednesday that California-based Western Digital Corp (NASDAQ:WDC) was seeking to crash the auction, charging that Toshiba is violating a joint venture between the two, who together operate a plant in Japan.

Western Digital urged that it should be given exclusive negotiating rights.

The Benefits Of Competition

“If it goes under it’s a huge benefit to Micron, Hynix, Samsung and soon-to-be Intel,” he said.

Analyst Commentary

“I think in general that that market is very strong, but at the end of the day (the chip) is a commodity,” he added. “Once you take one supplier out of a tight supply, it is good for the makers and bad for the guys who buy them.”

He said if Hynix succeeds in buying Toshiba’s chip business, it would vault into second place, behind Samsung.

Toshiba is ailing because of the bankruptcy filing by its U.S. nuclear unit. Westinghouse Electric Co. It needs to sell all or part of its most lucrative asset to cover the writedown.

Toshiba reported in Tokyo on Tuesday that “there are material events and conditions that raise the substantial doubt about the company's ability to continue as a going concern.”

Rumored Western Digital-Toshiba Deal Could Be Accretive To Earnings