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Western Digital Corp has offered to drop out of a group bidding for Toshiba's coveted flash memory chip business to take a stronger position in their joint venture instead, two sources familiar with the matter said on Tuesday.

The move may help Toshiba finally seal a deal to sell the chip business after months of delays, providing it with the funds needed to cover billions of dollars in liabilities arising from the failure of Westinghouse, its US nuclear power engineering subsidiary. A consortium including Western Digital, US private equity firm KKR & Co, the state-backed Innovation Network of Japan and Development Bank of Japan were previously offering around 1.9 trillion yen ($17.4 billion) for the chip business, according to people familiar with the talks.

Those talks had stalled in recent weeks, however, as the two sides struggled to come to an agreement over Western Digital's stake in the business, which the Japanese company wanted to limit in an attempt to avoid prolonged antitrust reviews, sources have said.

Toshiba and Western Digital, joint venture partners at Toshiba's key plant in central Japan, are the world's second and third largest producers of NAND memory chips after Samsung Electronics Co.

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