TOKYO (Reuters) - Embattled Toshiba Corp 6502.T will pick a Japanese government-led group of Japanese, U.S. and South Korean firms and funds to buy the conglomerate's semiconductor business, two people briefed on the matter said on Tuesday.

FILE PHOTO: A logo of Toshiba Corp is seen outside an electronics retail store in Tokyo, Japan, February 14, 2017. REUTERS/Toru Hanai/File Photo

The consortium, whose bid clears Toshiba’s 2 trillion yen ($18 billion) minimum, has been seen as one of the strongest suitors for the unit - the world’s No. 2 producer of NAND chips - as it would automatically have the government’s stamp of approval, other sources have told Reuters.

Toshiba needs to sell the prized chips unit to cover billions of dollars of losses from its now-bankrupt U.S. nuclear unit.

The three-country group has been fighting to counter a 2.2 trillion yen offer from U.S. chipmaker Broadcom AVGO.O and its partner, U.S. private equity firm Silver Lake, which sources have said Toshiba management favors.

The group includes the state-backed fund Innovation Network Corp of Japan, the government's Development Bank of Japan, and U.S. private equity firm Bain Capital. South Korean chipmaker SK Hynix Inc 000660.KS and the core banking unit of the Mitsubishi UFJ Financial Group Inc 8306.T are to provide financing under the consortium's proposal, sources have said.

Another person with direct knowledge of the matter said Toshiba’s board will vote on a preferred bidder on Wednesday and announce the result through the Tokyo Stock Exchange.

A Toshiba spokeswoman said the company cannot comment on specifics of the sale process.

The Japan-U.S.-Korea bid has been orchestrated in large part by Japan’s trade ministry, which wants to keep the valuable chip unit under domestic control.

But Toshiba wants to complete the deal as quickly as possible to help cover massive cost overruns at its Westinghouse Electric Co nuclear unit, which went bankrupt in March, and to dig itself out negative shareholders’ equity that could lead to a delisting.

The conglomerate wants to reach a definitive agreement on a buyer by its June 28 annual shareholders meeting.

The consortium had told Toshiba it needs to resolve a legal dispute with Toshiba's U.S. chip-venture partner Western Digital Corp WDC.O before it will invest in the firm's chip unit, sources briefed on the matter said before the decision.

Western Digital has sought a U.S. court injunction to prevent its partner from selling the chip business without the U.S. firm’s consent. Chief Executive Steve Milligan said this month that Toshiba was violating contractual rights and had left the U.S. firm no choice but to pursue legal action.

A condition that Western Digital, which has proposed its own bid, essentially drop its legal action could pave the way for the California-based firm to join the government-led consortium.

“The ball is now in Western Digital’s court,” a source said.

But Western Digital is reluctant to join the group in its current form due to worries that sensitive technologies belonging to its joint venture with Toshiba could be leaked to rival SK Hynix, sources said.

It regards their technology in NAND semiconductors, which provide long-term data storage, as on par with that of industry leader Samsung Electronics 005930.KS. By contrast, SK Hynix is weak in NAND although strong in DRAM chips, which help electronic devices perform multiple tasks at once.

Western Digital declined to comment.

Foxconn, the world's largest contract electronics maker, is also a suitor. Formally known as Hon Hai Precision Industry 2317.TW, the Taiwanese firm is leading a consortium that includes Apple Inc AAPL.O and computing giant Dell Inc.

($1 = 111.7400 yen)