TOKYO/SAN FRANCISCO (Reuters) - Toshiba Corp 6502.T aims to name a winner for its prized semiconductor business next week, people familiar with the matter said on Wednesday, as a row with one of the bidders over the sale appeared to escalate.

Slideshow ( 3 images )

Sources told Reuters the choice has narrowed to one bid from U.S. chipmaker Broadcom Ltd AVGO.O and U.S. tech fund Silver Lake and another from Toshiba chip partner Western Digital Corp WDC.O and Japanese government-related investors.

Toshiba is rushing to find a buyer for the world’s second-largest producer of NAND chips, which it values at $18 billion or more, to cover billions of dollars in cost overruns at its now-bankrupt U.S. nuclear business Westinghouse Electric Corp.

The laptops-to-nuclear conglomerate will hold a board meeting on June 15 to decide on the preferred bidder, two sources said, declining to be identified as they were not authorized to speak to the media.

Western Digital, which jointly operates Toshiba’s main chip plant in Yokkaichi, western Japan, has complicated the sale effort with a legal challenge, accusing Toshiba of a serious breach of contract over the joint venture.

It argues that the unit cannot be sold without its consent and has demanded exclusive negotiating rights.

But in a letter seen by Reuters, Toshiba struck back, again asking Western Digital to stop challenging the plans.

“Toshiba encourages Western Digital to redirect the considerable efforts that it has put into disrupting Toshiba’s sale process into more productive channels.”

Toshiba did not immediately respond to requests for comment.

Western Digital confirmed in a statement that it had received Toshiba’s letter but added that any move by Toshiba to sell the unit without its consent “clearly violate the transfer restrictions in the joint venture agreements.”

Western Digital said it was “best positioned to assist Toshiba in addressing its challenges and advancing its legacy of technological innovation in Japan.”

The Broadcom-Silver Lake bid is seen as attractive because of its higher price of 2.2 trillion yen ($20 billion), sources have said.

Western Digital by comparison has an offer of less than 2 trillion yen and could also face antitrust hurdles because the firm is the third-largest maker of NAND flash-memory chips.

“Naturally, for the Toshiba corporate side, Broadcom is the best choice,” one source said.

Toshiba shares rose as much as 6 percent on Thursday on the news that the company was closing in on a buyer. The stock has lost some 36 percent since late December when the company flagged huge losses at its U.S. nuclear power operations.

Other bidders include U.S. private-equity firm Bain Capital with South Korean chipmaker SK Hynix Inc 000660.KS, and Taiwan's Hon Hai Precision Industry Co Ltd 2317.TW with its Japanese unit Sharp Corp 6753.T .