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Struggling chip maker Elpida Memory Inc. has applied for a new government financial aid program in a bid to shore up its capital base and ride out a severe industry downturn, sources said.

The state-backed Development Bank of Japan is expected to extend about ¥30 billion to Elpida, while four private banks, including Bank of Mitsubishi-Tokyo UFJ, are in the final stage of talks to provide ¥80 billion to ¥90 billion in syndicated loans to the company in line with the government rescue program, the sources said.

Elpida, the world’s third-largest maker of dynamic random access memory chips used mainly for mobile phones and personal computers, is expected to obtain the government’s approval by the end of the month at the earliest. It will become the first company to receive a capital injection under the new corporate rescue program.

Elpida’s move is likely to prompt other struggling electronics makers to seek government-backed rehabilitation measures.

Under the program, nonfinancial firms like Elpida are able to receive capital investments from the DBJ on condition the government covers 50 percent to 80 percent of possible losses in the event of bankruptcy.

Elpida sought the use of de facto public funds as it sank into the red from the erosion of chip prices and stagnant demand caused by the global recession.

The chip maker incurred a group net loss of ¥178.8 billion in the year to March amid the global economic downturn.

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