Elpida Memory Inc. said Wednesday it is considering applying for government support funds because the global economic crisis is making it difficult to get financing.
The announcement by Elpida, one of the world's leading chip makers, came a day after Prime Minister Taro Aso's Cabinet approved a plan to implement a special financial aid program targeting nonfinancial firms by revising the industrial revitalization law.
Reeling from a significant erosion in its earnings, Elpida is the first company to say it may use the aid program.
If the program makes it through the Diet, the government-backed Japan Finance Corp. would be able to make up for a large portion of potential losses on loans or investments that the Development Bank of Japan or commercial banks have incurred.
The government would not inject public money directly into undercapitalized companies. The development bank or other banks would use their own money to provide loans or buy shares in companies that have been approved by the Ministry of Economy, Trade and Industry as needing special assistance.
The world's third-largest maker of dynamic random access memory chips for personal computers fell into the red with a net loss of ¥45.6 billion in the first half of the 2008 business year. Falling prices for memory chips amid slowing global demand was the primary reason.
If Elpida gets support from the program, it is expected to make it easier for major banks to finance it and prompt other ailing firms to follow suit.