Elpida to Raise Stake in Taiwan DRAM Venture

Today's Best Tech Deals

Picked by PCWorld's Editors

Top Deals On Great Products

Picked by Techconnect's Editors

Japanese DRAM maker Elpida Memory plans to increase its stake in a joint venture Taiwanese DRAM maker, giving it control over the venture and providing partner Powerchip Semiconductor with a much needed cash infusion.

Elpida will buy 94.3 million shares of Rexchip Electronics by the end of March to increase its stake in Rexchip to 52 percent from 48.8 percent currently.

Elpida and Powerchip said the price of the shares has not yet been determined.

Rexchip is a private venture owned by Powerchip and Elpida. The two companies teamed up in late 2006 to start developing Rexchip. The partnership involves sharing the costs of building advanced DRAM chip factories, which can cost around US$3 billion each, and joint development of chip technology.

Powerchip is the largest memory chip maker in Taiwan, but a DRAM market downturn has hit it hard financially. The company has reported net losses totaling NT$32.03 billion (US$963.6 million) for the first nine months of this year, has announced a hiring freeze and said it won't build any new production lines next year.

A glut of DRAM chips caused prices to tumble late last year, turning most DRAM makers into money losers. DRAM chip prices remain low, dropping to new record lows week by week.

The global credit crunch has worsened the situation for DRAM companies by making loans harder to come by. DRAM makers need billions of dollars to build new chip factories and hundreds of millions to upgrade existing chip lines to the latest technology.

Analysts have expected a deal between Elpida and Powerchip for some time because Powerchip needs cash to continue paying back loans on the chip factories it has built in recent years.

The Elpida-Powerchip deal comes on the heels of another DRAM deal in Taiwan this week.

On Wednesday, two Taiwanese companies agreed to loan Micron Technology, of Boise, Idaho, US$285 million to partly pay for Qimonda's stake in Taiwan's Inotera Memories.

Note: When you purchase something after clicking links in our articles, we may earn a small commission. Read our affiliate link policy for more details.
Shop Tech Products at Amazon