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By Makiko Yamazaki, Liana B. Baker and Kentaro Hamada
TOKYO/SAN FRANCISCO, June 8 (Reuters) - Toshiba Corp 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.
Sources told Reuters the choice has narrowed to one bid from U.S. chipmaker Broadcom Ltd and U.S. tech fund Silver Lake and another from Toshiba chip partner Western Digital Corp 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 giant will hold a board meeting on June 15 to decide on the preferred bidder, two sources said.
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 and Western Digital did not immediately respond to requests for comment.
The Broadcom-Silver Lake bid is attractive because of its higher price of 2.2 trillion yen ($20 billion), sources have said.
This compares with an offer of less than 2 trillion yen from Western Digital, which 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. .
Other bidders include U.S. private-equity firm Bain Capital with South Korean chipmaker SK Hynix Inc, and Taiwan's Hon Hai Precision Industry Co Ltd with its Japanese unit Sharp Corp. ($1 = 109.5200 yen) (Additional reporting by Taro Fuse in TOKYO; editing by William Mallard/Alexander Smith)