Western Digital Corp. is now seeking a 19.9 percent stake in Toshiba Corp.’s chip unit, giving up on its earlier plan to obtain a majority stake in an effort to reach a compromise over the acquisition, according to sources close to the matter.

Under the new proposal, the U.S. firm — Toshiba’s joint production partner at a chip plant in Mie Prefecture — is aiming to buy Toshiba Memory Corp. in a joint bid with the government-backed Innovation Network Corp. of Japan turnaround fund and the government-owned Development Bank of Japan, the sources said Monday.

Cash-strapped Toshiba is trying to sell a majority stake in the chip unit for roughly ¥2 trillion to make up for huge losses from its U.S. nuclear business. The embattled conglomerate needs to raise cash to eliminate its negative net worth by next March to avoid being delisted from the Tokyo Stock Exchange.

But Toshiba has been reluctant to sell the stake in the world’s second-largest producer of NAND flash memory chips to Western Digital, as it is concerned that the acquisition by the world’s No. 3 memory chipmaker could prolong antitrust examinations and delay the sale of the flash memory business.

Abandoning the previous plan to bring Toshiba Memory into the Western Digital group could clear such problems, resolving a bitter conflict between the two companies.

Western Digital CEO Steve Milligan is set to visit Japan this week to hold talks with Toshiba President Satoshi Tsunakawa over the new plan, the sources said.

Toshiba will try to pick a bidder by June 28 when it holds a shareholders meeting.

Among other bidders, Sharp Corp. said Tuesday that Amazon.com Inc. and Apple Inc. will team up with its parent company Hon Hai Precision Industry Co. to jointly bid for Toshiba Memory.

With the backing from the two U.S. technology companies, Hon Hai, the Taiwan-based main assembler of Apple’s iPhones, aims to address the Japanese government’s concern about a technology drain through a takeover by a Chinese or Taiwanese firm. Japanese display maker Sharp is also part of the Hon Hai-led consortium.

Toshiba spun off its memory chip business in April to create Toshiba Memory and transferred its interest in the joint chip manufacturing operation with Western Digital to the unit.

Western Digital last month filed with the International Court of Arbitration of the Paris-based International Chamber of Commerce to block the sale, as it does not want the interest to be transferred.

Last week, Toshiba transferred the interest back from the chip unit to avoid the U.S. firm’s complaints.

In its new proposal, the U.S. firm plans to borrow funds from Toshiba’s major creditors Mizuho Bank and Sumitomo Mitsui Banking Corp. to buy the 19.9 percent stake through a special purpose company to be set up.

Still, some government officials support an acquisition by a consortium formed of the INCJ, the DBJ and U.S. investment fund Kohlberg Kravis Roberts.