Elpida Memory's board of directors has approved plans to issue new shares and convertible bonds worth a total of US$200 million to Kingston Technology.

Elpida said the funds would help enhance its operations and financial structure as well as solidify its relationship with the US memory module vendor.

Elpida will issue up to 6,470,200 new shares to Kingston to raise as much as 11.68 billion yen (US$125 million) from the module house. The Japan-based memory chipmaker will raise another US$75 million by issuing convertible bonds due 2013 to Kingston.

Kingston will accordingly take up a 4.79% stake in Elpida after completing the investment.

Elpida said in a statement. It also noted strengthening relationships with memory module manufacturers, which have a large volume of transactions with PC manufacturers, will make the company's business operations more solid and stable.

Elpida originally expected to receive capital from Taiwan Innovative Memory Company (TIMC), which was created as part of a Taiwan government effort to restructure its capacity-driven DRAM industry. As the TIMC project has failed to receive lawmakers' support, its plan to invest in Elpida has been suspended.

Elpida thinks its 65nm XS technology is able to compete with the 50nm process of other companies, and it is shifting directly to 40nm-class production in 2010. The company was quoted in previous reports saying half of its 12-inch capacity would be migrated to 40nm by the end of 2010.

By: DocMemory
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