(Bloomberg) -- Toshiba Corp. has narrowed the number of bidders for its semiconductor business from about 10 interested parties to a smaller group that includes Taiwan’s Hon Hai Precision Industry Co. and Korea’s SK Hynix Inc., according to people familiar with the matter.

The other remaining contenders include private equity firm Silver Lake Management and chipmaker Broadcom, which are collaborating on the deal, said the people, asking not to be identified because the matter is private. Offers, which are non-binding at this point, have come in at about 2 trillion yen ($18 billion), they said.

Japan’s government is likely to oppose a sale to Hon Hai or Hynix because of the strategic value of Toshiba’s technology, the people said. Toshiba will encourage Japanese companies to participate in the bidding process, though none are in the current group, the people said.

Toshiba is selling assets to contend with enormous writedowns in its Westinghouse nuclear business, stemming from cost overuns and construction projects delays. The Japanese company put Westinghouse into Chapter 11 bankruptcy protection last week and said it may book a loss of as much as 1.01 trillion yen for the year that ended in March. The Tokyo-based company plans to choose a winner for the chips business by summer so it can close the deal by March of 2018, one executive said last week.

Toshiba spokesman Tomoyuki Numata declined to comment. Hon Hai and Hynix declined to comment.

Hedge fund Effissimo Capital Management Pte disclosed Friday it has boosted its stake in Toshiba to 9.8 percent. The firm, set up by former colleagues of Japanese activist Yoshiaki Murakami, said last month it had become the company’s largest shareholder.

Toshiba’s problems are piling up. This week, the company told its banks that its funding needs may reach 1 trillion yen ($9 billion) in the year started April 1 and may fall short by 300 billion yen if it uses its existing credit line, people familiar with the matter said. That sent Toshiba’s bond risk soaring as investors grow concerned about its ability to repay debt.

Toshiba has also said it may be difficult for the firm to report results by next week’s April 11 deadline. Another delay, which would be its third, could affect the Tokyo Stock Exchange’s review of its qualifications for staying listed.

Sumitomo Mitsui Banking Corp. and Mizuho Financial Group Inc., Toshiba’s main lenders, downgraded Toshiba’s rating one notch to the second level of a five-tier scale, according to people with knowledge of the issue. The banks cut as they forecast huge losses and excess debt, said the people, who asked not to be identified.

"The substance of the company is deteriorating," said Katsuyuki Tokushima, the chief fixed-income analyst at NLI Research Institute, a unit of Nippon Life Insurance Co.

The flash-memory chips unit is Toshiba’s most valuable asset and the company resisted selling control until it became swamped in losses. Shareholders approved a sale of the prized business in a special meeting last month but only after publicly deriding management.

“Toshiba is now a laughing-stock to the whole world,” one shareholder said at the time. “I think all of you are incompetent as managers.”

Toshiba shares were little changed in Tokyo trading and have tumbled 24 percent this year.