Elpida to Buy Spansion Flash Assets
By JURO OSAWA
TOKYO -- Elpida Memory Inc. said it will take over part of U.S. chip maker Spansion's flash memory research-and-development assets, to tap growing demand for smart phones and better compete with its stronger South Korean rivals.
A spokesman for Elpida, Japan's only maker of dynamic random access memory chips, said Thursday that the company will hire Spansion's flash memory technicians and take over some of the U.S. chip maker's research assets.
Elpida doesn't currently produce flash memory, and the move represents the chip maker's latest attempt to step up efforts to compete with rivals such as Samsung Electronics Co., the world's biggest player in both DRAM and flash memory chips, and Hynix Semiconductor Inc.
DRAM memory is widely used in personal computers, while flash memory is common in smart phones and music players.
By implementing the R&D flash assets of California-based Spansion, which is seeking to restructure its debts and operations under Chapter 11 bankruptcy protection, Elpida will be able to develop memory modules combining flash memory and DRAM into a single package for use in high-end smart phones.
Demand for these combined modules is expected to grow substantially in the coming years. U.S. research firm iSuppli estimates the market for memory chips used in wireless communication devices, including smart phones such as the iPhone, will grow nearly 40% to about $8.7 billion in 2012 from about $6.3 billion in 2009.
Elpida's effort to gain flash capacity also comes on the heels of U.S. DRAM maker Micron Technology Inc.'s $1.27 billion deal announced last month to acquire major flash memory maker Numonyx Holdings B.V.
Elpida declined to disclose the exact cost of this move. Nomura Securities analyst Masaya Yamazaki wrote in a report that the cost of buying the assets will likely come to several hundred million yen.
The new investment is possible partly because worries over Elpida's financial standing are easing. After suffering losses in the global economic downturn due to the financial crisis and receiving public funds, Elpida posted its first quarterly net profit in more than two years in the quarter ended December as demand surged on consumer appetite for computers with Microsoft Corp.'s new Windows 7 operating system.
"We have already completed the necessary procedures to take over [the flash memory R&D assets]," the spokesman said.
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