According to Reuters, the cunning plan to save the company would stop a $1.3 billion bid for Renesas by private equity firm KKR. KKR is is in talks to buy a majority stake in the world's leading manufacturer of microcontroller chips used in cars.
Renesas shares swelled by a third on the back of the rumours which would see the company get cash from the taxpayer-funded Innovation Network in return for a controlling stake in Renesas.
Toyota and other Japanese manufacturers are big customers of Renesas, which has struggled with sinking prices and aggressive overseas rivals, in order to secure their supply chains.
The Japanese government has moved to try and prop up technology companies in the past including chucking tons of cash at the impossible to save Elpida.
What is strange about this deal is that the company already had a bail out deal with KKR in what would have been the private equity firm's biggest investment in Japan.
But it seems that the deal has upset the Japanese banks who are worried that microcontroller supplies could be disrupted if KKR pushes for significant additional restructuring.