Report: Japan govt to invest in memory chip maker

Report: Japan govt to invest in memory chip maker

The Development Bank of Japan has decided to invest in Elpida Memory, a memory-chip joint venture of NEC and Hitachi, with a view to making it easier for the company to raise additional funds from other investors, according to a report in the Nihon Keizai Shimbun business newspaper.

The bank will invest $US18.3 million in Elpida, said the newspaper which did not identify its source. Elpida set out earlier this year to raise $US915 million from investors and has now decided to increase that to $US1.4 billion, the newspaper said.

Both Elpida and the Development Bank of Japan (DBJ) declined to comment on the report. The DBJ also said no decision on such an investment has been made.

Elpida was formed in late 1999 as NEC and Hitachi attempted to cope with volatility in the dynamic RAM (DRAM) market and increasing competition from companies in South Korea and Taiwan. Earlier this year it became Japan's only major DRAM maker when Mitsubishi exited the business and transferred its operations to Elpida.

At present the company operates an advanced DRAM fabrication plant (fab) in Hiroshima, Japan, and also buys chips from Taiwan's Powerchip Semiconductor Corporation as part of an alliance formed between the two companies in 2002.

It was the sixth-largest DRAM manufacturer in 2002 with a 4.9 per cent share of the world market, according to the most recent annual data from IDC.

Combined with Mitsubishi Electric, the company would have had a 6.9 percent market share, which would have been enough for fifth place. Ahead of it was Samsung, Micron, Hynix, Infineon and Nanya.

The Powerchip alliance was expanded earlier this year when Elpida agreed to transfer advanced semiconductor production technologies to Powerchip and begin a technical training program for the Taiwanese company's engineers.

The training program was due to begin in October however it ahd yet to start, a spokesperson for Elpida, Yuko Takahashi, said.

Despite the late start to the training program, the production schedule for chips from Powerchip made on the more advanced line remained unchanged at 2004.

In May this year, the company also announced the signing of a memorandum of understanding with Promos Technologies to transfer similar chip production technology.

The two companies set the end of September as a deadline for coming up with a definitive agreement, however a deal had yet to be reached and talks continue, Takahashi said.

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