Elpida eyes shares in Taiwanese chipmakers

TOKYO/TAIPEI: Japan's Elpida Memory Inc said on Thursday it is looking at buying shares in Taiwanese chipmakers, taking another stab at deepening cross-border ties in its fight against industry leader Samsung.

Possible targets include Powerchip Technology Corp, ProMOS Technologies and Winbond Electronics Corp, Bloomberg News quoted Elpida chief executive Yukio Sakamoto as saying in an interview.

As a first step, Elpida, the world's No. 3 maker of DRAM chips, is considering raising around 10 billion yen ($120 million) by listing its shares on the Taiwan Stock Exchange in early 2011, an Elpida spokesman said.

"It's almost impossible for the Taiwanese to survive by themselves," Sakamoto was quoted as saying. "Without doing something, it will be tough for us to survive, too. We don't have the scale."

John Chiu, a fund manager at Fuh Hwa Securities Investment Trust in Taiwan, said the Elpida move was "reasonable", given its ties with its Taiwanese peers.

Elpida and Powerchip are long-term partners and operate Rexchip, a joint venture in Taiwan, while the Japanese company outsources some production to ProMOS and Winbond.

"Timing for an industry consolidation has passed but companies can still strengthen their cooperation to stay competitive," he said.

But he added that Elpida was unlikely to catch up with Samsung in the short term and he doubted if it would be able to raise a lot of money by listing in Taiwan because sentiment towards tech shares was weak.

The latest plans follow a failed attempt to create a Japan-Taiwan team in the DRAM sector last year, amid a severe downturn.

Taiwan planned to set up a new firm to rescue the country's chipmakers, which was to form a capital tie with Elpida and share technology but the deal fell apart as the Taiwanese government scrapped a plan to inject funds into the firm.

Elpida is looking to acquire stakes of 20-30 per cent in Taiwanese peers this time and any deals may lead to takeovers, Bloomberg said.

The Elpida spokesman said that no actual talks are under way. Powerchip spokesman Eric Tang said Powerchip and Elpida have a close relationship for a long time and it would welcome the move. ProMOS officials were not immediately available for comment.

Samsung Electronics and second-ranked Hynix Semiconductor, which together control more than a half of the global DRAM market, are proving tough competitors.

Demand for DRAM (dynamic random access memory) has been slowing in the last several months due to weakening growth in PC sales, but Samsung still plans a record 11 trillion won ($9.8 billion) spending on chips this year.

Besides DRAM chips, used mostly in personal computers, Samsung makes other types of semiconductors such as NAND chips for mobile phones, portable music players and digital cameras.