Elpida forgives Powerchip debt, lifts stake in JV

TOKYO, JAPANESE: Japanese chipmaker Elpida Memory Inc said on Wednesday it plans to raise its stake in a Taiwan venture with Powerchip Semiconductor Corp to 71 percent by the year's end in exchange for debt forgiveness.

As a first step, Elpida, which is chasing sector leaders Samsung Electronics and Hynix Semiconductor, on Tuesday raised its stake in the PC memory chip production venture, Rexchip, to 64 percent from 52 percent after Powerchip failed to pay back a short-term loan from Elpida.

Elpida, which is battling with U.S. chipmaker Micron Technology to be the world's No.3 DRAM maker, had lent an undisclosed amount to Powerchip, with the loan backed by a 19 percent stake in Rexchip. The Nikkei business daily said the loan was worth a little more than 10 billion yen ($111 million).

Loss-making Elpida, which is itself heavily indebted, plans to take control of management at Rexchip as it gauges the timing for raising output there of smaller and more power-efficient dynamic random access memory (DRAM) chips.

The move is unlikely to have a significant impact on its earnings, Elpida said in a statement.

Elpida, which is fighting to keep up as bigger rivals invest in new technologies, plans to build a research and development centre in Taiwan with Taiwan's state-backed Taiwan Memory, the Nikkei also said. Elpida spokesman Hiroshi Tsuboi said that nothing was decided.

Last month, Elpida secured 110 billion yen in loans from its banks and raised another 60 billion yen from investors to help pay back its mounting debt and invest in new technologies.

Its shares were down 0.7 percent at 1,212 yen, compared with a 1.7 percent fall in Tokyo's electrical machinery index.