Antitrust officials in China’s Ministry of Commerce are concerned about the role SK Hynix Inc. will play in the sale of Toshiba Corp.’s memory chip business as the country commences a review of the deal, according to sources.

The officials are looking at the fact that Hynix could take a sizable stake in the business if the sale goes ahead, the sources, who asked to remain anonymous as they weren’t authorized to speak on the matter, said.

From Toshiba’s side, they may need to provide stronger assurance to regulators that it won’t hurt competition.

The ministry could impose conditions on a deal, the sources said.

China is the world’s largest market for semiconductors and is spending billions to build up its domestic industry. Hynix, South Korea’s second-largest chipmaker, is part of a group led by Bain Capital LP that is buying the business from Toshiba for ¥2 trillion.

The Icheon-based company is financing the deal through convertible bonds that could give it as much as 15 percent of the voting rights in the business.

The ministry didn’t immediately respond to a faxed request for comment. Hynix declined to comment. Toshiba and Bain weren’t immediately able to comment.  read the rest here

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