* Toshiba confirms it is in talks with other suitors
* Preferred bidder talks struggling due to SK Hynix role -sources (Writes through and adds Toshiba comment)
TOKYO, July 11 (Reuters) - Toshiba Corp told its creditor banks it is in talks with Western Digital Corp and Taiwan's Foxconn over the $18 billion sale of its prized chip unit in addition to its preferred bidder, banking sources familiar with the matter said on Tuesday.
The crisis-wracked conglomerate later confirmed it was in talks with other suitors as it had not been able to reach an agreement by its self-imposed deadline of June 28. It did not name the suitors.
Toshiba's preferred bidder group includes the state-backed fund Innovation Network Corp of Japan, the Development Bank of Japan, U.S. private equity firm Bain Capital and South Korean chipmaker SK Hynix Inc.
But talks have struggled to progress due to what sources say are proposals by SK Hynix that its financing be done via convertible bonds - a step that would provide it with a path towards an equity interest in the world's No.2 NAND chip maker.
Toshiba is keen for its South Korean rival to have no equity or management influence in the chip unit - a stance it has taken to satisfy a government that wants the business to remain under domestic control and for key technology to be kept out of the hands of foreign rivals.
The banking sources on Tuesday declined to be identified as they were not authorized to speak on the matter.
A representative for Western Digital, Toshiba's chip business partner but which has been at loggerheads with the Japanese firm over the sale, declined to comment.
A representative for Foxconn, the world's largest contract electronics maker formally known as Hon Hai Precision Industry , was not immediately available for comment. (Reporting by Taro Fuse; Additional reporting by Taiga Uranaka and Makiko Yamazaki in Tokyo, and JR Wu in Taipei; Writing by Taiga Uranaka; Editing by Edwina Gibbs)