Elpida mulls buying into local chipmakers

The China Post news staff

TAIPEI, Taiwan — Elpida Memory Inc., the largest maker of dynamic random access memory (DRAM) products in Japan, announced yesterday that it will buy stakes in Taiwanese chipmakers in an attempt to counter competition from Samsung Electronics Co., according to the Chinese-language United Evening News.

The UEN cited Elpida’s president Yukio Sakamoto as saying that his firm is seeking to purchase 20 to 30 percent of a Taiwanese DRAM maker or explore any deals that may result in takeovers.

Elpida has yet to start negotiations for the acquisition deal, but has targeted Powerchip Technology, ProMos Technologies, and Winbond Electronics as priority candidates for entering into a partnership. Informed sources also noted that Elpida won’t rule out partnering with Nanya Technology Corp. and Inotera Memories of the Formosa Plastics Group.

This is not the first time that Elpida has mulled mergers with Taiwanese chipmakers. The Japanese firm said in 2008 it was in talks with Powerchip and ProMOS, but those discussions ended last year after the Taiwanese government proposed an alternative revival plan that ultimately collapsed. In response to the latest announcement by Elpida, a spokesman of Powerchip said that his company has maintained a technical cooperation partnership with Elpida, but both sides have yet to talk about the stake acquisition issue. The spokesman added that as Powerchip is a listed company, any other company can easily purchase the firm’s shares from the local stock market. ProMos spokesman Tseng Pang-chu said that his company will consider any proposal raised by Elpida, and the chief finance officer of Winbond also noted that his company will be open to any possible deal with Elpida. In contrast, a Nanya Technology spokesman said that as his company has been engaged in cooperation with Micro Tech Inc. of the U.S. for 10 years, it is unlikely to build any partnership with Elpida.

Nevertheless, all the listed shares of these local chipmakers saw their prices rally significantly yesterday on the announcement of Elpida’s planned acquisition deal.

Elpida is also planning to list its shares on the Taiwan Stock Exchange in early 2011 as the next step in the larger strategy, Sakamoto said. The listing would help the company raise money in Taiwan when the time comes to do deals, he said. Elpida began outsourcing production to Hsinchu-based Powerchip in 2003. The two companies formed Rexchip in 2007 to jointly produce computer memory. Elpida last year also signed outsourcing contracts with ProMOS and Winbond.