Elpida Memory Inc., Japan's largest computer-memory chipmaker, rose the most in more than seven weeks in Tokyo trading after the company said it began merger talks with Taiwanese chipmakers including Powerchip Semiconductor Corp, Bloomberg reported.
Elpida climbed 13 percent, the largest increase since Nov. 6, to 582 yen as of the 11 a.m. break on the Tokyo Stock Exchange, after surging as much as 17 percent. The benchmark Nikkei 225 Stock Average slipped 0.8 percent.
Elpida is talking with Powerchip, Rexchip Electronics Co. and ProMOS Technologies Inc., Yukio Sakamoto, chief executive officer of Tokyo-based Elpida, said in a Bloomberg interview on Dec. 26, without elaborating on details of the negotiations. The four companies combined would challenge Samsung Electronics Co. as the world's biggest producer.
"If Elpida can form a new axis against Samsung, there will be two giants in the industry so that the current excessive price competition will be corrected," said Yoku Ihara, head of equity research at Retela Crea Securities Co. in Tokyo. "Elpida could make good offers to Samsung's main customers to compete."
Falling prices of dynamic random-access memory, which temporarily stores data in computers to speed up operations, have led Taiwanese chipmakers to post six consecutive quarters of losses.
Hsinchu-based ProMOS, Taiwan's most unprofitable memory-chip maker, gained 2.9 percent to NT$2.16 as of 10:03 a.m. local time in Taipei trading. Powerchip, the island's largest DRAM maker, added 1.4 percent to NT$3.73.
A combination would be the biggest reorganization in the $28.8 billion computer-memory chip industry since 1999, when Elpida and Hynix Semiconductor Inc. were formed after falling prices forced mergers among Asian chipmakers.
Elpida and the three Taiwanese companies accounted for 23.9 percent of global DRAM revenue at the end of the third quarter, in line with market leader Samsung's share, according to estimates at Taipei-based Dramexchange Technology Inc., operator of Asia's biggest spot market for chips.
Falling prices will drive down DRAM industry revenue to $24.9 billion in 2009 from $28.8 billion this year, according to estimates at UBS AG this month. Prices of the benchmark DRAM have tumbled 61 percent this year to a record low, according to Dramexchange.
ProMOS, which asked for a government bailout earlier this month, is also in talks with Micron Technology Inc. about technology cooperation, Spokesman Ben Tseng said on Dec. 26.
Samsung lost 3.6 percent to 439,500 won in Seoul trading and Hynix, the world's second-largest computer-memory maker, dropped 6.9 percent to 6,450 won.
