Micron To Acquire Elpida Memory For $2.5 Billion

The acquisition will arm Micron with greater manufacturing bandwidth and a broader mobile DRAM portfolio, while it will help the ailing Elpida Memory repay some of its $5 billion in debt.

Micron will be granted full ownership over Elpida Memory's assets, including a DRAM fabrication facility in Hiroshima, Japan; an assembly and test facility in Akita, Japan; and approximately 65 percent ownership interest in Taiwanese chip maker Rexchip.

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Through a separate agreement with Powerchip Technology also revealed Monday, Micron said it would acquire another 24 percent share of Rexchip, meaning it will own approximately 89 percent combined of the company's outstanding shares.

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The combined fab assets of Elpida and Rexchip will allow Micron to produce 200,000 300mm wafers per month, an approximate 50 percent increase over its current manufacturing capacity.

"We are creating the industry-leading pure-play memory company," said Micron CEO Mark Durcan in a statement. "Today's transactions will help strengthen the combined companies' market position in the memory industry through increased research and development and manufacturing scale; improved access to core memory market segments; and additional wafer capacity to balance among DRAM, NAND and NOR memory solutions for the ultimate benefit of Micron and Elpida customers."

The acquisition also means Micron will have access to Elpida's full portfolio of mobile DRAM offerings, including those optimized for smartphones and tablets. According to industry analyst IHS iSuppli, the mobile DRAM market is poised to boom over the next few years as mobile device adoption -- in lieu of traditional desktop PCs -- continues to soar.

iSuppli predicts mobile DRAM bits will account for nearly 32 percent of all DRAM bits shipped in 2015, a significant jump from the 6.2 percent they accounted for in 2009.

As part of the deal, Micron said it will pay $750 million for Elpida's equity and $1.75 billion in annual payments through 2019 to help repay its debt.

"As a result of these payments, all pre-petition debt obligations of Elpida will be fully discharged under the corporate reorganization proceedings," said the Micron statement. "The agreement also calls for Micron to provide certain financing support for Elpida capital expenditures, subject to specified conditions, and to maintain Elpida's operations and employees."