At the news of the ongoing meeting between the top management of Japan’s Toshiba and US-based memory maker Western Digital in Tokyo, industry observers are raising the possibility that South Korea’s SK hynix may be far from acquiring Toshiba’s chipmaking unit, according to news reports Wednesday.

According to a report by Japan’s Nikkei, the meeting of the chiefs of the two longtime business partners – Toshiba CEO Satoshi Tsunakawa and Western Digital CEO Stephen Milligan – could bring a major change to Toshiba’s stance about the halted sale of its $18 billion won worth NAND flash memory business due to the American company’s lawsuit against the deal.

Toshiba has been in talks with a global consortium led by US private equity Bain Capital, including Korea’s SK hynix, which the Japanese chose as a preferred bidder in June. However, the talks have been deadlocked due to Toshiba’s legal issues with Western Digital.

The Toshiba CEO is expected to ask his Western Digital counterpart to drop its lawsuit opposing the sale to any third party without its consent. Meanwhile, the Western Digital chief is likely to seek to make his company involved in the sale.

“The meeting between the two company heads is being held as usual as part of the whole sale process,” said an industry official. “Toshiba seems to be talking with not only preferred bidders such as SK Hynix, but also some others.”

If the two sides strike a compromise, some industry officials assume that Toshiba would replace the Western Digital consortium with the Bain Capital consortium including SK hynix.

The Seoul-based company, the second-largest memory chipmaker in the world, had vowed to seek all-out efforts to acquire the Toshiba unit in order to boost its 3-D NAND flash business.

However, its participation in the investment as a lender became an issue during the recent negotiations with Toshiba over the Korean firm’s possible demand for a stake in the Japanese business.

SK hynix CEO Park Sung-wook affirmed in July that the company is seeking a stake in Toshiba and it is not considering to drop out of the race.

“Negotiations have been held normally until recently, while we are not allowed to comment about any specific matters,” said a public relations official at SK hynix.

By Song Su-hyun (song@heraldcorp.com)