The trade ministry is ready to back Western Digital's bid to merge with memory chipmaker Kioxia, provided control of cutting-edge technology stays in Japan, two sources with knowledge of the industry regulator's internal discussions said.
The tie-up could give Japan greater leverage in geopolitical rivalries increasingly dominated by technology, including over shortages of chips. It could also help Japan forge deeper semiconductor industry ties with its U.S. ally, a commitment that President Joe Biden and Prime Minister Yoshihide Suga made in April.
"We will give our support to the indispensable, important semiconductor capacity innovation in Japan," one of the sources said. Western Digital would need to present a plan that both Japan and the United States "can celebrate," the source added, without giving details.