While Western Digital’s earlier stance may have resulted in increased litigation costs whereas its current stance is likely to give it access, in the form of a minority stakeholder, in Toshiba’s chip business.

As per two sources familiar with the matter at hand, Western Digital Corp is likely to join a consortium of Japanese government funds along with KKR & Co LP for Toshiba Corp’s chip business unit.

This move signifies Western Digital backing away from its earlier demand for an immediate majority stake in Toshiba’s chip unit.

The consortium is likely to be the favored bidder for Toshiba’s chip unit, the world’s second biggest producer of NAND memory chips. The involvement of state backed Innovation Network Corp of Japan and the Development Bank of Japan is largely seen as having the government’s stamp of approval.

Western Digital’s new found approach marks a turning point in the hotly contested auction of Toshiba’s chip business which it has valued at nearly $18 billion (2 trillion yen).

A successful sale of its chip business is critical to its future in the wake of massive cost overruns at its U.S. nuclear unit Westinghouse.

Earlier, Western Digital had sought arbitration proceedings and had argued that the Japanese conglomerate was violating its joint venture contract and demanded exclusive negotiating rights.

Although earlier Western Digital had told Toshiba it wants a stake of at least 51% in its chip unit, it has now chosen to tread a different path and is now open to being a minority investor in the company.

Japan will not want Toshiba’s chip business to come under direct control of a foreign manufacturer since semiconductors are considered important from a national security standpoint.

Toshiba’s declined to comment on the specifics of the sale process. Similarly, KKR, DBJ and Western Digital declined to comment.

A representative from the trade ministry was not immediately available for comment.

A spokeswoman from INCJ stated the fund would not comment on speculation.

($1 = 111.3500 yen)