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Elpida forecasts market share expansion to 20%

Elpida Memory Inc, Japan's largest maker of memory chips used in computers and electronics, raised its projected market share to 20 percent from its previous forecast of 15 percent in the fiscal year starting April 2006.　

President Yukio Sakamoto, 57, made the forecast at the company's chip plant in Hiroshima, Japan, saying he expects demand for personal computers and consumer digital electronics may start rising in February.

He said the company currently has an 8 percent share of the market for dynamic random access memory (DRAM).

The Winter Olympics in Torino, Italy, and soccer's World Cup tournament in summer 2006 will likely drive up demand for digital cameras, DVD recorders and other equipment that uses chips Elpida makes, Sakamoto said.

Elpida is raising capital investment and increasing production to counter price declines for chips that contain more circuits.

The company last month cut its full-year profit forecast to between ?5 billion (US$42 million) and ?10 billion , from an earlier estimate of ?14 billion, citing costs of starting a new production line and falling prices.

Elpida ranked fifth in the global DRAM market as of the three months ended June 30, according to market researcher iSuppli Corp. Samsung Electronics Co dominates the market with more than a third of total revenue.

Elpida last month raised capital investment for this year to ?190 billion from its April forecast of ?143.6 billion to increase production of 90 nanometer chips. A nanometer is a billionth of a meter and measures the distance between transistors in a chip.

consolidation

Sakamoto today predicted competition will drive one or more of its rivals out of business.

He spoke at a ceremony marking the opening of the 300mm wafer production line at its Hiroshima factory, which uses 90-nanometer technology.

"Looking into the future, one or two companies will drop out from the industry," Sakamoto said.

"The winners will be determined by who can and cannot make 90 nanometer chips," he said.

For the year ending March 2006, Elpida expects sales to be between ?240 billion and ?250 billion, compared with an earlier estimate of ?260 billion, citing a bigger-than-expected decline in chip prices and a production delay in its 90-nanometer and 100-nanometer chips.

The chips are outsourced to Semiconductor Manufacturing International Corp (中芯), China's biggest made-to-order chip supplier.

Semiconductor Manufacturing, based in Shanghai, is expected to start producing chips for Elpida from the first quarter of 2006, Elpida said last month.
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