Elpida, Micron, Nanya merger talks reach final stage

Japan, U.S. and Taiwan semiconductor giants in last phase of merger negotiation, where combined entity could have second largest share of global DRAM market, beating South Korean chipmakers, according to report.

Japanese chipmaker Elpida Memory are reportedly in the final stages of merger negotiations with U.S.-based Micron Technology and Taiwanese company, Nanya Technology. 

The Japanese semiconductor company is reportedly aiming to regain lost ground in the global semiconductor memory market, of which South Korean players control more than 60 percent, by merging with the world's fourth and fifth largest dynamic random-access memory (DRAM) manufacturers, sources familiar with the matter told Yomiuri Shimbun in a report Wednesday.

Citing figures from U.S. research firm IHS iSuppli, the Japanese newspaper noted that South Korea's Samsung Electronics held the largest DRAM market share of 45 percent between July and September last year. The combined shares of all three companies during the same period was 28 percent, exceeding South Korea's Hynix Semiconductor which held the second largest market share at 22.2 percent.

Sources also noted that all three companies were in favor of the merger and soon would begin assessing assets and other necessary procedures.

According to Yomiuri Shimbun, Elpida will be asking the Innovation Network Corporation of Japan for investment funds as it needs large amounts of funding for production facilities to enhance the performance of its semiconductor.

The amount offered by the fund, operated by both the government and private sector, may be as large as 100 billion yen (US$1.3 billion). However, the Innovation Network Corporation of Japan is expected to consider the offer "carefully", due to Elpida's struggling performance in light of a stagnating DRAM market and the yen's appreciation, noted the report.

The Japanese chipmaker will also be looking to improve its corporate credibility through the merger and seek loan refinancing from domestic financial institutions, because it will need 92 billion yen (US$1.2 billion) in non-capital investment by end-March or early-April for debt repayments and debenture redemption, sources told Yomiuri Shimbun.