Tokyo: A Japanese state-backed fund may invest in Toshiba Corp's memory chip business as a minority partner - a move that would help the government prevent a sale to bidders it deems risky to national security, sources familiar with the matter said.
Discussions on a potential investment are, however, at a very early stage and may not develop further as some people within the government are concerned it could be seen as a publicly funded bailout, one of the sources said.
If the fund, the Innovation Network Corporation of Japan (INCJ), teamed up with a bidder that would give the suitor a major advantage as it would represent a government stamp of approval, the sources said, declining to be identified as they were not authorized to speak on the matter.
Cutting-edge chips are at the heart of robotics, artificial intelligence and connected devices and the government is worried that key technology could be transferred to China, people with knowledge of the matter have said previously.
The government is prepared to use Japan's foreign exchange and foreign trade laws to control the auction if need be, they said. Trade Minister Hiroshige Seko has said the ministry, which oversees INCJ, has no plans to rescue Toshiba. An INCJ spokesman said the fund would not comment on speculation.
