Photo/IllutrationThe Tokyo headquarters of Toshiba Corp. (Asahi Shimbun file photo)

Despite a spotty track record, the concept of a "Japan coalition" is again being floated by the economy ministry to acquire financially troubled Toshiba Corp.'s semiconductor subsidiary and keep it out of foreign hands.

Ministry of Economy, Trade and Industry officials are concerned about the outflow of sensitive technology and other national security issues that might arise if Toshiba sells its semiconductor business to a foreign entity.

The first round of bidding included an offer of close to 3 trillion yen ($27 billion) from Hon Hai Precision Industry Co. of Taiwan as well as a number of U.S. and other companies. However, no Japanese company showed an interest in taking over Toshiba's semiconductor operation.

Many of the major Japanese electronics companies have exited the semiconductor business because of the heavy financial burden involved. In addition to the instability in the overall performance of semiconductor sales, annual capital investments of between 200 billion yen to 300 billion yen are required to maintain competitiveness in the global market.

According to sources, the economy ministry has worked with top business executives to approach Japanese companies that have business dealings with Toshiba, such as Fujitsu Ltd. and Fujifilm Holdings Corp., about joining a consortium of companies that would likely partner with U.S. entities in bidding in the second round.

The plan is to have several dozens of companies contribute about 10 billion yen each. Additional capital contributions would come from such government-affiliated institutions as the Innovation Network Corp. of Japan (INCJ) and the Development Bank of Japan.

The creation of a Japan coalition of companies to bid in the second round would allow some leverage over how the decision is made on Toshiba's semiconductor business.

Still, even economy ministry officials are uncertain about whether a sufficient number of Japanese companies will join.

Past examples do not bode well for the ministry's plan.

NEC Corp., Hitachi Ltd. and Mitsubishi Electric Corp. combined their dynamic random-access memory (DRAM) chip businesses to establish Elpida Memory Inc., but that company filed for bankruptcy protection in 2012 and was eventually acquired by a U.S. company.

Japan Display Inc. was established in 2012 by combining the small and midsize liquid-crystal display operations of Toshiba, Sony Corp. and Hitachi. However, Japan Display has shown few signs of profitability, leading to the decision by INCJ, the company's leading shareholder, to inject additional funds in December 2016.