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Possible versions to fix Elpida debt repayment crunch
Josephine Lien, Taipei; Jessie Shen, DIGITIMES [Tuesday 31 January 2012]

Japan-based memory chipmaker Elpida Memory reportedly is struggling to repay its debts due by early April, and therefore is exploring various options to raise funds in time. Industry observers speculate on some possible directions that Elpida might choose in fixing the immediate problem.

In one scenario, Elpida would partner with US rival Micron Technology with an aim to jointly compete against longtime industry leader Samsung Electronics. Under some form of partnership, the pair could unite their existing Taiwan-based partners - which have a great deal of engineering resources and 12-inch wafer capacity - for a leaner cost structure and enhanced productivity. Such integration links among the non-Korean DRAM firms could be the right direction in favor of not only the industry's near-term development but also its sustainable growth.

Powerchip Technology and ProMOS Technologies are both among Elpida's DRAM manufacturing partners. The Japan-based vendor has also shifted part of its in-house production to Rexchip Electronics, its Taiwan-based production subsidiary.

Micron has close ties to Taiwan's Nanya Technology and Inotera Memories, with the latter treated as a manufacturing JV between Micron and Nanya. Both Nanya and Inotera also accept financial support from Nanya's parent company Formosa Plastics Group, Taiwan's largest petrochemical conglomerate.

However, the Japan government's attitude would disrupt tie-up talks between Elpida and Micron. The government favors a scenario that would avoid the risk of technology outflow.

Speculation had circulated previously that the Japan government intended to push some form of integration between Elpida and Toshiba - the country's major memory chip suppliers - considering that Japan should keep its home-grown DRAM technology. Integrating both sides' DRAM, flash and logic IC technology and assets would also help the country expand its overall competitiveness against Korea's semiconductor industry.

Nonetheless, Toshiba has denied such speculation that it was considering merging with the financially-troubled chipmaker.

While failing to bring Elpida and Toshiba together, the Japan government might throw another lifeline to save the company. Alternatively, Elpida could get a further extension on bank loan repayments through the government's assistance.

In the worst-case scenario, Elpida could end up losing support from the Japan government. Without solutions and help to shore up its capital base, the company would have to scale down its operations for survival.

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