ELPIDA, OTHERS TO BUILD $5 BL CHIP PLANT IN CHINA

Tokyo
The Economic Times

Japan's Elpida Memory Inc, the world's No.3 maker of PC memory, and a Chinese investment group plan to spend about $5 billion on a chip factory in southeastern China, in a move that could exacerbate memory chip price falls.

Elpida, which analysts expect will report a quarterly loss on Thursday, said it, the Suzhou city government and another unspecified company would set up a joint venture in which Elpida would be the main investor with a 39 per cent stake.

The plant will supply chips for PCs used in China, will have an initial output capacity of 40,000 wafers a month when it goes on line in January-March 2010, and will raise capacity to 80,000 wafers at an unspecified time, it said.

"Elpida will probably lift its share (of the Chinese market) if the project proceeds as planned," JP Morgan Securities analyst Yoshiharu Izumi said. "But it's not clear that the company will be able to generate the targeted returns on investment, given ongoing falls in DRAM prices."