TOKYO -- Westinghouse Electric's bankruptcy filing and parent Toshiba's planned sale of its memory business are expected to be on the agenda at a Japan-U.S. economic dialogue here next month, with national security concerns raised on both sides.
Washington considers Westinghouse's bankruptcy a potential national security issue, an official told Reuters. The U.S.-based Toshiba unit has supplied reactors for nuclear-powered aircraft carriers and submarines, and the administration of President Donald Trump probably hopes to head off any delivery problems or potential technology outflows.
Japanese Finance Minister Taro Aso and U.S. Vice President Mike Pence are likely to discuss the matter next month alongside trade issues.
The Japanese government, meanwhile, is concerned about Toshiba's plans to sell its memory operations. Toshiba's NAND flash memory is used in solid-state drives, which are sometimes used to store confidential information. Many are equipped with encryption technology to protect against cyberattacks. Letting this technology fall into foreign hands could leave Japanese data centers more vulnerable to hacking, heightening the risk of information leaks.
Tokyo is particularly worried about suitors from mainland China or Taiwan, as well as South Korea to a lesser extent. Companies with production facilities in mainland China, such as Taiwanese contract manufacturer Hon Hai Precision Industry, also present a risk that Toshiba technology could be leaked to Beijing.
The Japanese government plans to subject any proposed acquisitions by foreign buyers to advance review. The process will let Tokyo recommend altering the terms of a potential deal or scrapping it entirely.