Japan — Elpida Memory Inc., a corporation that develops, manufactures, designs and sells dynamic random-access memory (DRAM) products, announced plans Monday to raise $990 million through bonds and new shares in order to get into the smartphone memory chip business.
In the aftermath of Japan’s March 11 earthquake, the company witnessed a 15 percent slump in its $2.4 billion market value — losing nearly $360 million. The company’s action will reduce the equity of existing shareholders.
According to Reuters, it is necessary for Elpida to raise funds in order to invest in cutting-edge technology that will make them contenders against South Korean industry leaders Hynix Semiconductor and Samsung Electronics.
“Investors realize that semiconductors are capital intensive. What they want to know is how and when will the investment be turned into profit,” said a fund manager in Tokyo to Reuters. “As the global chip industry consolidates, the expectation is that Elpida will just about survive.”
The Japan-based corporation plans to invest the money in the development of memory chips for smartphones, tablet PCs and other mobile devices, enabling it to migrate away from the declining market for computer chips.