Monday, February 24, 2003
Elpida Memory, Inc. is negotiating with Intel Corp. to draw investment from the U.S. semiconductor giant as part of a major reinforcement of its manufacturing position which could total more than $600 million. Intel is not expected to provide the whole sum but could be ready to put up about a $250 million, according to local sources.
The negotiation with Intel has been long rumored and was reportedly confirmed at the beginning of the year (see January 5 story).
Yukio Sakamoto, president of Elpida, commenting today (February 24, 2003) on recent reports on Elpida and Intel's negotiations, said: "It is true that we are making efforts to raise funds of 80 billion yen (about $680 million). But we can not make any comment on rumors and guesses."
On another occasion, however, Sakamoto had implied that he was expecting to close the cash-raising negotiations by the end of March.
"The negotiations should be coming to a conclusion," said Akira Minamikawa, senior analyst at Tokyo branch of West LB Securities Pacific Ltd., who specializes in semiconductor industry matters. "They should be boiling down the amount now, which is expected to be settled around 30 billion yen (about $254 million)," he said.
Elpida, the sole DRAM manufacturer in Japan, was formed from the combination of the DRAM operations of Hitachi Ltd. and NEC Corp. in 1999, and is set to absorb Mitsubishi's DRAM business by the end of March 2003.
Hitachi and NEC invited Yukio Sakamoto to be president of Elpida last November to reshape Elpida's business.
From the beginning Sakamoto has insisted on the need to expand the capacity of Elpida's new 300-mm fab in Hiroshima. The fab began operation early this year with a capacity of 3,000 wafers a month supported by the additional investment of 44 billion yen (about $373 million) made this fiscal year by parent companies Hitachi and NEC.
That capacity is too small in terms of economies of scale Sakamoto said when he became president. As a result Elpida decided to expand the monthly capacity at Hiroshima fivefold to 15,000 wafers a month as quickly as possible and is calling for investments of total 80 billion yen (about $680 million) from the third parties.
Elpida has been loss making from its creation but "Elpida's business has some bright spots; for example, low power consumption synchronous DRAMs, for which demand is growing as buffer memories of digital cameras. Elpida may have successfully gathered possible investments of nearly 70 billion yen (about $593 million) [including Intel]." said Minamikawa.
By: DocMemory
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