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The escalating row between Japanese conglomerate Toshiba Corp and Western Digital Corp over the sale of its highly sought-after chip unit - has prompted the Japanese government to comment on the dispute. Japan’s government has expressed concern over the row and has called on both parties to cooperate.

US firm Western Digital requested international arbitration in its latest efforts to prevent Toshiba from selling the chip unit without its consent. Western Digital has alleged that the Japanese conglomerate is guilty of violating contracts in relation to the joint-venture that operates Toshiba’s main semiconductor plant.

Toshiba has threatened to block Western Digital employees from the joint-venture chip plant and database. Toshiba is adamant that it will execute that threat if the US firm did not sign a broad collaboration agreement that the two had negotiated.

“We are putting on hold a decision to limit access as we continue talks toward solving the issue," a Toshiba spokeswoman said. Western Digital, which is headquartered in the sunny-state of California is one of the bidders for the world’s second biggest NAND chip producer – but isn’t amongst the frontrunners to secure the deal as its bid was apparently significantly lower than other potential suitors.

Japan’s Trade Minister Hiroshige Seko reiterated to reporters in the country that it was imperative that the two organizations resolved the row and began to cooperate with each other. He said: “It's very important for Toshiba and Western Digital to cooperate, this row needs to be resolved quickly, and I’d urge both organizations to sit down and discuss a path forward.” In addition to this, Japan’s Trade Minister admitted that the ministry did not intend to intervene in the dispute.

Reports emerging from Tokyo suggest that one of the proposed deals on the table from the government in relation to the sale of the chip unit – which is valued at $18 billion, is to bring chip unit under the control of state-funded Innovation Corporation of Japan (INCJ) fund.

The Financial Times reported on Tuesday that some senior members in Prime Minister Shinzo Abe's administration have privately discussed offering up to $8 billion in government loan guarantees to support an INCJ-KKR bid. Japan government spokesman Yoshihide Suga, said, however, that there was no truth to the report. A spokeswoman for INCJ declined to comment.

The uncertainty has caused shares in Toshiba to decline – the conglomerate is dependent on the sale of the chip unit to cover the billions it owes at its bankrupt US based nuclear facility Westinghouse. Shares have fallen by 12%.

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