KKR, Japanese government-backed fund to jointly bid for Toshiba's memory chip business

US private equity firm KKR & Co will team up with Japanese government-backed fund, Innovation Network Corp of Japan (INCJ), to submit a joint bid for Toshiba Corp's memory chip business, the Nikkei business daily reported.

INCJ chairman Toshiyuki Shiga had this week said that it was looking at the auction although it had not bid in the first round of the auction.

A bid from INCJ would appeal to the Japanese government, which does not want Toshiba's chip technology to fall into the hands of overseas companies, especially the Chinese.

This late move comes after media reports said that Taiwan's Foxconn Technology Group, the world's largest electronics contract manufacturer, had tabled a 2-trillion bid for Toshiba's chip business.

South Korea's SK Hynix, US chipmaker Western Digital Corp, Broadcom-Silver Lake Partners consortium have also submitted preliminary bids of around 2 trillion ($17.98 billion) or more, according to media reports.

The Japanese government wants a local company to buy Toshiba's chip business, and Japan's chief cabinet secretary Yoshihide Suga had earlier said flash memory chips are ''extremely important'' for Japan's growth strategy.

Japanese lawmakers are concerned that Foxconn, also known as Hon Hai Precision Industry Co, would shift Toshiba's manufacturing plants to China, where labour is cheap, and may also transfer Toshiba's intellectual property to China.

In February, debt-laden Toshiba decided to sell part or whole of its flash memory chip business to save the group from the impact of a $6.3-billion write-down at its US nuclear business.

Last month it warned that its net loss for 2016 could exceed 1 trillion ($9 billion) - one of the biggest losses in Japanese corporate history (See: Toshiba to file for bankruptcy as Westinghouse losses mount to $9 bn).

Toshiba is the world's second-largest NAND chip manufacturer after South Korea's Samsung Electronics Co Ltd, and its products are used in data centres and consumer goods worldwide, including Apple's iPhones and iPads.

The sale would include businesses that handle system LSI and discrete chips, which are used in cars, home appliances and industrial machinery, but not Toshiba's NAND flash memory operations.