Micron to acquire memory maker Elpida for $2.5bn

The Japanese chipmaker will give its American buyer two fabs and a 50 percent increase in its manufacturing capability. Why? One word: mobile.

Micron Technology announced this morning that it will acquire  Elpida Memory, a Japanese chipmaker, for approx. $2.5 billion.

Approximately $750 million of the purchase price will be in cash; the rest will be paid in installments through 2019.

The value of the company? Facilities. Elpida has a 300-millimeter DRAM fabrication facility located in Hiroshima, Japan and a 65 percent ownership stake in Rexchip, which itself has a 300-millimeter DRAM fabrication facility in Taiwan, as well as an assembly and test facility in Akita, Japan. 

Micron also announced a deal with Taiwan's Powerchip to acquire its 24 percent share of Rexchip for approx. $334 million. Combined, Micron will control 89 percent of Rexchip's shares.

The name of the game here is mobile. The fab assets of Elpida and Rexchip together can produce more than 200,000 300-millimeter wafers per month -- a 50 percent increase in Micron's current manufacturing capacity.

Elpida specializes in serving the mobile DRAM market, building chips for mobile phones and tablet computers. (Micron has a much broader portfolio.) The new Micron hopes the deals will affirm its market prowess, give it more R&D muscle and better access to customers and, of course, boost its wafer capacity as the market takes off.

And it will, if Apple has anything to say about it. The American tech company is a major customer of Elpida.

The deal is expected to close in the first half of 2013, pending regulatory approval. Micron's purchase of Powerchip's shares of Rexchip will occur upon closing the Elpida transaction.