Yukio Sakamoto, president and CEO, described consigned production of high value-added DRAMs and pseudo SRAMs for use in mobile phones, digital home appliances, servers and other equipment, as premium business, and emphasized that Elpida is focusing its efforts on such business. "Although in the DRAM business there is a risk that the market might crash, the unit price of our mainstay premium DRAMs is not falling as rapidly as that of DRAMs for PCs," said Sakamoto.

"Most DRAM manufacturers cannot easily join the area of premium DRAMs," Sakamoto added, commenting on the competition in the DRAM market. "Our only rival is Samsung Electronics Co Ltd of Korea. Considering that Samsung is financially much stronger than we are, it is difficult to secure our advantage. Yet we must confront Samsung, and prevail by all means."

Elpida is planning to spend the capital from the stock trading mainly on constructing the second plant at Hiroshima Elpida Memory Inc, a production subsidiary of Elpida in Higashi Hiroshima. The second plant is expected to be completed in the second half of fiscal 2005 and to have a production capacity of 60,000 300mm wafers per month, using 80nm design rule. Capital spending for this plant's construction is estimated to total ¥450-500 billion. As for capital investment and operating costs in the near term, "In addition to profits generated by the stock deal, we will strive to bring our operating cash flow into profitability by improving our operation," Sakamoto said. "We are aiming to boost the capital ratio from the current 40% to about 70%, which is equivalent to Samsung's."

According to its consolidated results for the first half of fiscal 2004 (April-September 2004) released recently, sales grew 142% year-on-year to ¥100.2 billion. Operating income was ¥8.3 billion, while net income reached ¥6.5 billion -- both returned to profitability following the losses (of ¥17.7 billion and ¥17.6 billion, respectively) posted for the same period last year. Operating cash flow showed a loss of ¥2.8 billion, though. For the current full-term through March 2005, the company expects sales to rise 119% year-on-year to ¥220.1 billion, and estimates an operating income of ¥26.5 billion and a net income of ¥21.6 billion. Elpida logged an operating loss of ¥26.4 billion and a net loss of ¥26.9 billion for fiscal 2003.