Hon Hai Precision Industry Co., commonly known as Foxconn, is said to be readying a massive $26.93 billion bid to acquire Toshiba Corp.’s semiconductor business.

The Wall Street Journal first reported news of the potential bid, saying that the Taiwanese electronics manufacturer faces bidding competition from companies including SK Hynix Inc., Broadcom Ltd. and Silver Lake Partners, a private equity investor. Although some of the other bidders have submitted offers in the region of $18 million, Bloomberg said Foxconn has offered to pay close to $27 billion in a bid to force negotiations.

Toshiba currently lags behind rival firm Samsung Electronics Co. Ltd. in storage, having failed to advance its manufacturing processes as quickly, and in January was reported to be looking at spinning off its flash memory business as a separate entity through the sale of a majority stake.

It needs the money to deal with over $9 billion in losses from Westinghouse, its U.S nuclear division, which recently declared Chapter 11 bankruptcy. Indeed, it said on Tuesday for the first time that those losses raise doubts about whether it will be able to stay in business.

As for South Korean memory maker SK Hynix, it’s said to be holding discussions with Japanese investors over a joint bid that would see take a maximum 20 percent stake in Toshiba’s semiconductor business. SK Hynix is unable to cover the full $18 billion costs by itself, and is instead considering buying equity in its potential partners to sweeten any deal.

However, it’s likely the Japanese government would oppose any bid by Foxconn or SK Hynix for national security reasons, as it believes Toshiba’s technology has strategic value.

That opposition could open the door to Broadcom, which was earlier said to be considering a joint bid for Toshiba’s semiconductor assets along with Silver Lake. Given the close relationship between the Japanese and the U.S. governments, Bloomberg said that Broadcom is “better trusted.”

Although no Japanese companies have stepped forward as potential bidders thus far, there remains a chance that Toshiba could opt for a kind of bailout known as “hougacho-hoshiki,” which entails investments from multiple domestic companies. A spokesperson for Fujifilm Holdings Corp. told Bloomberg it would consider participating in such a move once it fully understands the investment framework.

Toshiba is looking to sell off a majority stake in its memory business in order to offset more than $9 billion in losses incurred from its U.S.-based nuclear division Westinghouse, which recently declared bankruptcy. Those debts could well force Toshiba to accept the highest offer, though a sale to Foxconn would be opposed by Japanese officials as it would likely try to bring jobs and infrastructure, and possibly even intellectual property to China. Bloomberg reported that Foxconn had also spoken to SK Hynix about the possibility of a joint bid, but Hynix rejected any possibility of a deal.

It’s also being reported that other potential bidders, including Apple Inc., Amazon.com Inc. and Google Inc., are no longer in the running.

Image: Share GK/Flickr