Ailing Elpida may sell mainstay Hiroshima plant to raise cash

Kyodo

Elpida Memory Inc., currently undergoing rehabilitation, is considering selling its mainstay plant in Hiroshima Prefecture to raise money, according to sources.

The DRAM maker is also mulling a capital and business alliance with major U.S. chip-maker Micron Technology Inc. by accepting its investment, the sources said Wednesday.

In a briefing the company provided to its creditor banks, Elpida said it is studying the possibility of receiving support from Innovation Network Corp. of Japan, an investment fund backed by the government, to rebuild its financial standing, the sources said.

Elpida, whose business has been declining due to dropping DRAM prices and has to redeem massive amounts of corporate bonds and debts, plans to secure cash reserves through the sale of the plant in Higashihiroshima.

The company plans to continue production and maintain employment by leasing the plant back after selling it, the sources said.

The banks will closely monitor the prospects for the sale of the plant as well as negotiations on receiving investment and the government’s stance on supporting the chip-maker, the sources said.

The plant will focus on manufacturing high performance DRAM used in such products as smartphones. It will transfer output of general-purpose products including PCs to a Taiwanese subsidiary and a business partner to cut costs, the sources said.

Elpida also has a plan to compete with South Korea’s Samsung Electronics Co., which has an overwhelming share in the DRAM market, by forming an alliance with Micron after enhancing its finances, the sources said.

In 2009, the company received around ¥30 billion in investment from the government-backed Development Bank of Japan under an emergency financial aid program.