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The bid for Toshiba’s flash memory business is set to get even more crowded.

A government-backed fund, the Innovation Network Corporation of Japan (INCJ), officially expressed its interest in the chip division that is being put on sale for more than $18bn to bolster Toshiba’s severely damaged balance sheet.

“Since this is such a significant deal, we are of course paying close attention as an investment fund,” said Toshiyuki Shiga, chairman of INCJ. “We’ve set up an internal team to study the deal.”

Japanese government officials and business leaders have previously expressed concerns about Toshiba’s Nand flash memory technology falling into Chinese hands, but efforts to find a consortium of Japanese buyers has so far made little progress.

Mr Shiga said that the fund, which has an investment capacity of about ¥1tn ($9.2bn), did not participate in the first round of bidding and has yet to find partners to join the second round of bidding.

People close to the talks have said Toshiba has narrowed its preferred bidders to US chipmaker Broadcom, which partnered with private equity group Silver Lake; Taiwan’s Hon Hai Precision Industry, which has approached Apple for a joint investment; Western Digital, a chip venture partner with Toshiba; and South Korea’s SK Hynix.

People close to the INCJ have expressed caution about being drawn into the high-profile battle after the fund lost out against Hon Hai, better known as Foxconn, in the takeover of Japanese consumer electronics group Sharp last year.

Shares in Sharp rose 6 per cent on Tuesday after the Nikkei reported that Foxconn is considering including the Japanese unit in the bidding for Toshiba’s chip division. Foxconn has indicated it might be willing to pay as much as $28bn for the business, according to people involved in the talks.

Copyright The Financial Times Limited 2017. All rights reserved.
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