NEC, Hitachi to invest $1.45 b. in DRAM plant

TOKYO: Japanese electronics giants NEC Corp and Hitachi Ltd. are expected to

agree on Tuesday to invest jointly 160 billion yen ($1.45 billion) in a new

dynamic random access memory (DRAM) production plant in Japan.

The plant will be operated by Elpida Memory Inc, a chip joint venture between

NEC and Hitachi that began operating in April. Elpida had said in September it

had ambitions to become the world's number one maker of DRAM chips.

The investment will broaden DRAM collaboration between the two Japanese firms

in the cost-intensive production field, aiming to raise their competitiveness to

combat foreign rivals.

The two semiconductor makers had already agreed last year to join forces in

DRAM designing and marketing.

NEC, Japan's largest and the world's number two chip maker, said it was

considering a joint investment with Hitachi to build the new DRAM plant.

The two companies plan to approve the project, based in the western Japanese

city of Hiroshima, later in the day.

The Nihon Keizai Shimbun financial daily said the two companies intended to

integrate their DRAM production and eventually take Elpida public.

Kenji Tokuyama, president of Elpida, which held a 13.6 per cent share of the

global DRAM market last year making it the fourth-largest memory chip supplier,

has said the company would need its own facilities soon to grab a larger market

share.

Taking Elpida public was certainly a future option, Tokuyama has said.

In the global DAAM market, Korea's Samsung Electronics held the leading 20.7

per cent share in 1999, followed by Hyundai Electronics Industries with 19.3 per

cent and Micron Technology Inc with 14.4 per cent, according to research firm

Dataquest.

As of 0130 GMT, shares in NEC were traded up 1.89 per cent at 2,160 yen.

Hitachi shares stood at 1,100 yen, down 0.9 per cent.

(C) Reuters Limited 2000.