Elpida Memory Raises Ownership in Rexchip Electronics

Taipei, Dec. 2, 2008 (CENS)--Elpida Memory Inc. of Japan recently decided to increase its stakes in Rexchip Electronics Corp., a DRAM venture it co-holds with PowerChip Semiconductor Corp. (PSC) of Taiwan, according to PSC.

PSC said it would swap 94 million of its shares in the joint venture for Elpida's NT$1.2 billion (US$39 million at US$1:NT$33) in the deal, raising Elpida's holding in the venture to 52% from 48.8%, with the deal to be completed in March 2009.

After the share swap, Rexchip will set aside 52% of its production capacity for Elpida while PSC will retain the remaining 48%. In addition, Elpida will gain one more seat on Rexchip's board of directors.

PSC's spokesman, C.M. Tang, said the share swap would be in cash, with net value of per Rexchip share being the pricing basis. As of the end of October, Rexchip's per-share net value was NT$13.17.

Tang noted that the share swap also offers the opportunity for Elpida to focus more on the DRAM contract market when the spot market has become very volatile.

PSC and Elpida co-founded Rexchip in 2006, with each holding 48.8% of the company and four director seats and one supervisor seat at the director board.

Rexchip lost a cumulative NT$2.1 billion (US$64 million) throughout the first three quarters, making it the DRAM maker with the least loss. The chipmaker now has 2,000 workers and puts out 80,000 wafers of DRAM chips a month. It is shifting to 65-nanometer process technology from 70nm node, as the former has proven be a 30% cost cutter but able to boost output by 20% relative to 70nm technology.

Industry watchers expect Rexchip and PSC to obtain Elpida's 50nm process technology next quarter. Elpida recently announced its 50nm DDR3 SDRAM chip, said to be the industry's smallest, and plans to put the chip into volume production next quarter.