Taiwan's Foxconn is pausing its interest in Nissan Motor as the Japanese automaker explores a potential merger with Honda Motor, Bloomberg News reported on Friday, citing people familiar with the matter.

Honda and Nissan have announced official plans to merge.The agreement seeks to consolidate a wide range of resources from platform sharing to supply chain systems in order to bolster the position of Japanese automakers in a rapidly evolving automotive market dominated by electrification and ongoing industry consolidation.

Facing extreme competitive pressure from the rise of Chinese EV makers, the Nos. 2 and 3 Japanese automakers turn to each other to build strength.