The Japanese government intends to scrutinize any proposed acquisition of Toshiba's memory chip business by a foreign buyer, using legislation that allows reviews in cases involving technology that could be diverted to military use.

Japanese law requires advance notice of foreign acquisitions of Japanese companies in certain fields so the government can gauge the impact on national security. The government can recommend that a given deal be changed or scrapped if necessary. Businesses to which this provision applies include defense contractors, manufacturers of high-performance materials and encryption devices, power companies, and broadcasters. Around 500 such notifications are sent each year.

In Toshiba's case, the government is concerned about technology related to solid-state drives, storage devices used in servers and elsewhere. Some solid-state drives include encryption technology to keep data secure.

Though the government plans to review any potential sale to suitors hailing from outside Japan, regardless of location, it is particularly concerned about the prospect of Toshiba technology getting into China's hands.

NAND flash memory -- a key component of solid-state drives and a mainstay of Toshiba's chip business -- is widely used in various countries' military equipment, and any tampering could prove disastrous, said a senior official from the Ministry of Economy, Trade and Industry. The U.S. torpedoed a Chinese company's plan to invest in hard-drive maker Western Digital, which partners with Toshiba on NAND production, in February 2016.

Toshiba's memory business is "highly competitive globally and of the utmost importance to preserving jobs," Chief Cabinet Secretary Yoshihide Suga said Thursday. "It's also increasingly important from an information security perspective."

By: DocMemory
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