Elpida to get funds from government, Taiwan Memory

This is a very important news, courtesy, MarketWatch!

By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch): Elpida Memory Inc. will receive 50 billion yen ($521 million), the government said Tuesday, much of it as part of Japan's new recapitalization program for struggling non-financial companies.

Japan's Ministry of Economy, Trade and Industry said Elpida will get 30 billion yen from the Development Bank of Japan by the end of August in exchange for preferred shares.

The infusion is part of a new program is aimed at supporting companies whose failure the government fears could have a broader economic impact.

"Elpida faces a very tough environment," Economy, Trade and Industry Minister Toshihiro Nikai was quoted as saying in several reports from the region. "DRAMs are widely used by major industries in our country, and securing the stable supply of them will benefit people's lives, as well as economic and industrial activities."

Taiwan Memory Co., a chipmaker set up by the island's government, plans to invest an additional 20 billion yen by the end of this fiscal year ending in March 2010, the ministry also said.

Elpida Memory Inc. President Yukio Sakamoto reportedly told a news conference Tuesday that the fund injection under the government's new aid program was the best option available for the chip maker to secure funding and remain competitive.

Last month, Japan's only maker of dynamic random access memory chips posted a group net loss of 178.8 billion yen for the fiscal year which ended in March, deeper than its 23.5 billion yen loss for fiscal 2007.

Pioneer, NEC next?
Other Japanese firms are expected to follow Elpida's move to seek funds.

Pioneer Corp., which anticipates a sixth consecutive year of losses this fiscal year, is now making preparations to apply for a public fund infusion, Japanese business daily Nikkei reported Tuesday.

NEC Electronics Corp. and Renesas Technology Corp. are also expected to consider taking action if their planned merger next April goes through as expected, the report said.

In Tokyo, Elpida shares closed up 1.4 percent, and NEC Electronics gained 4.2 percent. But Pioneer shed 1 percent.

The benchmark Nikkei 225 Average rose 1.8 percent.

Lisa Twaronite reports for MarketWatch from Tokyo.