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Wed, Feb 16, 2005 - Page 12 News List

Elpida expects to double market share

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Elpida Memory Inc, a venture between Hitachi Ltd and NEC Corp, aims to double its market share for dynamic random access memory (DRAM) chips next fiscal year by focusing on chips for cellphones and game consoles.

The company's stock rose to its highest level since it started trading in November.

"In the next three to five years, there will really only be three DRAM manufacturers in the world and, of course, we will be one of them," President Yukio Sakamoto, 57, said in an interview. "We'd like to bring our market share up to about 15 percent."

Sakamoto set up a unit to develop memory chips for consumer electronics in November 2003, avoiding the computer component market that is dominated by the world's biggest DRAM makers, Samsung Electronics Co and Micron Technology Inc. Elpida's chips are used in Sony Corp's PlayStation 2, the world's best-selling game console.

"The expectation is that the worsening of the digital consumer electronics business will end soon," said Yasuo Yabe, an investment adviser at Meiwa Securities Co. in Tokyo. "We're able to confirm Elpida's earlier outlook that earnings will recover."

Elpida is in talks with "five to six" mobile phone and consumer electronics manufacturers to supply DRAM chips that feature a technology 20 times more power efficient than used in existing semiconductors, Sakamoto said.

"We are walking a different path from Samsung, a path that has higher growth potential," he said.

Shares of Elpida rose ?250 (US$2.34), or 5.7 percent, to ?4,590, the highest since the stock debuted Nov. 15, today in Tokyo. They gained as much as 12 percent earlier.

Elpida last month said net income for the year ending March 31 will be between ?12 billion (US$114 million) and ?16 billion, falling short of an earlier ?21.6 billion forecast, because its customers bought less chips amid inventory build up of mobile phones, digital cameras and other consumer electronics.

Sakamoto said the excess inventory has been depleted, and the company will increase sales and profits in fiscal 2005, a year in which global sales of semiconductors are expected to shrink 2 percent, according to a November report by US-based market researcher IDC.

"The inventory adjustments have been completed as of January," Sakamoto said. "We can't give details on the outlook for next fiscal year, but we're expecting some drastic gains in sales and profits."

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