(Bloomberg) -- Toshiba Corp. temporarily canceled all meetings and decisions related to the sale of its memory chip business to address concerns raised by an industry partner, people familiar with the matter said.

Toshiba is trying to sell the business to raise much-needed cash, and the company has been narrowing down the field of interested buyers. That hit a snag after joint-venture partner Western Digital Corp., based in San Jose, California, said a sale may violate the companies’ contract. Toshiba’s spokeswoman Kaori Hiraki denied the sale process has been put on hold.

Western Digital Chief Executive Officer Steve Milligan wrote a letter to Toshiba’s board members on April 9 advising them that they should negotiate exclusively with his company before any sale. He also argued that the rumored bidders were unsuitable and the reported prices offered were above the fair and supportable value of the chip business, according to a person familiar with the process, who asked not to be identified because the information is private.

Toshiba and Western Digital are joint owners of certain chip business facilities. Shares of Toshiba fell as much as 8.1 percent in Tokyo on Friday, while Western Digital was little changed at the close in New York.

Western Digital’s contentions raise another potential roadblock in the troubled process. The Japanese company needs to shore up finances hurt by losses from its Westinghouse nuclear business and has warned that its very survival is at risk. Analysts cautioned that Western Digital does have legal rights that will bear on the sale process.

‘Consent to Approve’

“We believe that WDC has rights surrounding the JV including the consent to approve/disapprove of any transaction involving the joint venture,” Amit Daryanani, an analyst at RBC Capital Markets, wrote in a research note. “WDC has the legal wherewithal to veto or approve a winning bid.”

Toshiba disagrees with Western Digital’s assertion that a sale would violate the agreement between the two companies, Toshiba executives said when contacted by Bloomberg News.

Last year Western Digital, one of the largest makers of computer hard drives, made a $15.8 billion bet on technology that’s making its core business obsolete, with its purchase of SanDisk Corp. SanDisk was a manufacturing partner of Toshiba, a role that Western Digital has assumed.

That purchase piled debt onto its balance sheet and may restrict its ability to match some of the bids that other companies reportedly made for Toshiba’s chip unit. In January, Western Digital said it had cash and cash equivalents of $5.2 billion. The company had “liquidity available” totaling $6.2 billion and a net debt position of about $800 million, it said.

Toshiba has narrowed the original group of contenders for the chip business after a first round of bidding. Taiwan’s Hon Hai Precision Industry Co. has indicated its willingness to pay as much as 3 trillion yen ($27 billion), Bloomberg has reported.

Toshiba’s board is trying to balance the need for a quick sale with concerns that such a deal would mark the end of Japan’s chance of restoring its once-leading role in the $300 billion chip industry and potentially aid China’s push to enter that important market, Bloomberg News has reported.

Milligan’s letter, which was earlier reported by the Nikkei Asian Review, cautioned in particular against accepting a bid from Broadcom Ltd., a company that has led the wave of consolidation in the chip industry over the past two years.