TOKYO: Toshiba Corp on Wednesday denied it was considering merging with troubled chipmaker Elpida Memory, after a report in the Taiwanese trade publication DigiTimes said the two firms were in talks on such a deal.
The report, which pushed Elpida's shares up 5.6 percent in morning trade, is the latest in a series about possible survival plans for Japan's last remaining player in the dynamic random-access memory (DRAM) market, as it battles tumbling prices and loss of market share to South Korea's better-funded giants.
"We deny such speculation," said a spokesman for Toshiba, who declined to comment further.
Japan's Asahi newspaper said last month Elpida was considering asking to delay paying back 30 billion yen ($391 million) in public funds after its earnings were hit by the European debt crisis.
A separate report said Elpida would start tie-up talks with Taiwan's Nanya Technology Corp with a view to a possible merger.
Toshiba shares closed the morning down 1.0 percent, while the Nikkei average rose 1.2 percent.
A spokesman for Elpida said he was aware of the report, but declined to comment.
LITTLE BENEFIT
Analysts said a tie-up with Elpida would be of little benefit to Toshiba, which pulled out of the DRAM market a decade ago, though the DRAM-maker would likely welcome a helping hand.
"Elpida has a serious shortage of short-term financing, and I think the government, the banks and Elpida itself are working on that," said Takeo Miyamoto, an analyst at Deutsche Bank. "It would be good for them to find a sponsor, but hard for that sponsor to realise any merit."
The company has about 145 billion yen ($1.9 billion) in debt due by early April, compared with only about 100 billion yen in cash on hand as of the end of September, Miyamoto said. Elpida has said it is considering options including refinancing debt and securing advance payments from customers.
Formed through a merger of units of Hitachi and NEC , Elpida has recorded consecutive quarterly losses since Oct-Dec 2010 and is expected to report a further 30 billion yen operating loss in the three months to December 2011, based on the average estimate by six analysts polled by Thomson Reuters I/B/E/S.
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