NEC, Hitachi in chip deal

NEC Corp and Hitachi Ltd, Japan’s second and third-largest chipmak-ers,

will together invest Japanese Yen 44 billion (US$365 million) to increase

production of memory chips at their joint venture and catch up with rivals. The

companies, which have already invested Japanese Yen 52 billion in their

unprofitable venture Elpida Memory Inc, will spend the funds by March, NEC

spokesman Makoto Miyakawa and Hitachi spokesman Yukiaki Ina said. Elpida will

also seek outside investors, Ina said.

NEC and Hitachi posted record losses last fiscal year mainly because of

plunging prices of dynamic random-access memory chips.

The companies are buying the memory-chip business of Mitsubishi Electric Corp

to become the world’s number four DRAM maker. To compete with bigger rivals

such as Samsung Electronics Co, Elpida needs to expand capacity to achieve

economies of scale, analysts said.

The memory-chip venture will have capacity to produce 3,000 sheets of silicon

wafers measuring 300mm in diameter a month after the investment.

BLOOMBERG