Mitsubishi Electric Corp. has launched talks to sell its dynamic random access memory chip operations to NEC Corp. and Hitachi Ltd., Mitsubishi officials said Wednesday.

The deal would consolidate all of Japan’s DRAM businesses into one firm. The three parties hope to conclude the deal within the year.

Mitsubishi Electric’s DRAM business will probably be shifted to Elpida Memory Inc., a 50-50 joint venture set up by Hitachi and NEC in December 1999, the officials said.

Industry analysts say the acquisition will be valued at about 5 billion yen.

Mitsubishi Electric’s DRAM business generated sales of some 22 billion yen in fiscal 2001, commanding a 2.6 percent global market share and ranking seventh among global DRAM producers.

But the overall semiconductor business booked an operating loss of around 70 billion yen during the year, with DRAM and other memory chips accounting for two-thirds of this loss.

By transferring its DRAM operations to Elpida, Mitsubishi Electric reportedly aims to build a business structure less susceptible to market tremors.

Elpida is believed to have generated sales of roughly 100 billion yen in fiscal 2001 for an 8.5 percent share of the , holding the fifth-largest global market share, at 8.5 percent.

But it also booked an operating loss of more than 50 billion yen.

After taking over Mitsubishi Electric’s DRAM business, Elpida would command more than 11 percent of the global market share, surpassing German giant Infineon Technologies AG to rank fourth in the world.

Japanese firms held a combined 80 percent share of the global DRAM market in the 1980s. But Fujitsu Ltd. and Toshiba Corp. have since withdrawn from the DRAM business due to intensifying competition with Samsung Electronics Co. of South Korea and other foreign rivals.

Mitsubishi Electric and Hitachi have already agreed to launch a joint venture in April aimed at integrating their system chip operations.

They will also consider consolidating their flash memory and static RAM operations.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.