Taiwan Memory Co. will invest about 20 billion Japanese yen (US$206.62 million) in Elpida Memory Inc., the Japanese dynamic random access memory maker said June 30.

Yukio Sakamoto, president and chief executive officer of Elpida, said June 30 that his company has not reached a decision on the type of share issuance in exchange for TMC’s financial aid.

While TMC hopes to acquire a 10-percent stake in Elpida, TMC will not become a major shareholder of the company, Sakamoto said. The partnership with TMC is already under way, but the two sides are still in talks on details of the investment.

The move by TMC is intended to strengthen its partnership with Elpida in technology collaboration. While TMC declined to comment on the issue, industry insiders pointed out that, according to the terms under which the funding is arranged, TMC can probably only receive Elpida’s non-voting preferred stock for the investment. It is believed if TMC can only play the role of a passive investor in Elpida, it would be better for the company to put its money into Taiwan’s DRAM makers.

According to an announcement by Japan’s Ministry of Economy, Trade and Industry June 30, Elpida has applied for public funds based on a new bailout program initiated by the Japanese government. The government will pump 30 billion yen into Elpida through the state-owned Development Bank of Japan. The chipmaker will issue non-voting preferred stock for the public funding.

DBJ will invest an additional 10 billion yen in the company, adding to the 100 billion yen provided by Japan’s four major commercial banks and TMC’s 20 billion yen. Elpida is expected to receive a total fund injection of 160 billion yen.

It is believed that Elpida will use the capital to adjust production, including changing the operation arrangement of its 12-inch plant in Hiroshima from this month. The chipmaker will focus on the production of DRAMs for niche markets, and will form a partnership with Japan’s NEC Corp. and Renesas Technology Corp. to manufacture driver integrated circuits for thin-film-transistor liquid crystal displays.

Given fierce price competition and the need for lower unit manufacturing costs, Elpida will contract out its production of standard DRAMs to Taiwan’s Powerchip Semiconductor Corp. and Rexchip Electronics Corp.

By: DocMemory
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