Toshiba agreed to hold off closing the deal related to the future of its memory chip unit until a hearing on July 28.

Toshiba said it would proceed with negotiations and contract signing in the meantime. Toshiba and Western Digital were in court in the U.S. on Friday for a hearing on Western Digital's request for a preliminary injunction to block the sale. The Superior Court of California suggested the companies work on a proposal for providing Western Digital with two weeks' advance notice of the sale and didn't rule on the U.S. company's injunction request.

Toshiba said California Superior Court Judge Harold Kahn proposed a "finessed" alternative to a preliminary injunction, while Western Digital said the hearing amounted to court protection.

Steve Milligan, chief executive officer of Western Digital, stated, "We are grateful for today's directive by the Court, which is a victory for Western Digital, SanDisk and our stakeholders. Our entire goal was to preserve and protect our rights through the binding arbitration process, and that's precisely what the Court has done today. This is the second time this week that the Court has acted to protect SanDisk's rights and interests against Toshiba."

The hearing was held in connection with the preliminary injunctive relief proceedings sought by SanDisk related to Toshiba's attempts to transfer its JV interests.

The Superior Court of California suggested the companies work on a proposal for providing Western Digital with two week's advance notice of the sale and didn't rule on the U.S. company's injunction request.

Toshiba, whose sale of its chip unit is being challenged in court by manufacturing partner Western Digital Corp., agreed to hold off closing the deal until a hearing on July 28.

Toshiba tries to complete the sale of its flash-memory division by March. Western Digital has sought to block the deal on concerns the chip unit may end up with competitors. Whatever the court rules on July 28, the companies face arbitration proceedings that will ultimately determine which prevails.

Last month, Toshiba said a group led by the Innovation Network Corp. of Japan, Bain Capital and other investors were the preferred bidders for the semiconductor business, and that it was aiming to reach a final agreement and close the deal by March 2018. South Korean chipmaker SK Hynix Inc. will join the group by providing only loans to avoid antitrust hurdles.

The group aims to finalize the deal next week, INCJ Chairman Toshiyuki Shiga told reporters in Tokyo on Friday. It was possible that the lawsuit filed by Western Digital to stop the sale could have some effect on the timing, he said.

SK Hynix will contribute 520 billion yen to the bid, and is seeking to make part of the financing convertible into equity, Asahi newspaper reported Saturday.