Hony to sell Elpida plant to SMIC if bid succeeds – report

Hony Capital and TPG Capital have been preparing a bid for Elpida Memory, but are expected to face significant competitions from strategic investors including US-based Micron Technology, Japan's Toshiba Corp and South Korea's SK Hynix.

Legend Holdings, the parent company of Hony, also owns Lenovo Group, which relies on dynamic random access memory (DRAM) chips from Elpida and Samsung Electronics for its computers and smartphones. However, the price disputes with Samsung have led the Chinese computer producer to rely more on Elpida for supply. This has prompted suppply concerns should the asset fall into others' hands, the Nikkei business daily reported.

Elpida is the world's third largest chipmaker by market share and its bankruptcy, with debts of $5.6 billion, is the largest ever by a Japanese manufacturer. The company, which itself was formed a decade ago through the merger of several struggling chipmakers, was brought down by falling product prices and heavy capital spending.

Another potential joint-bid for the company also involves SK Hynix getting Elpida's main technology, while Toshiba takes the Taiwan factory and US-based GlobalFoundries receives the Hiroshima plant. However, a source told Reuters that Toshiba would not participate in the second round of bidding after talks with potential partners failed. The source didn't discount the Japanes firm joining up with the eventual winner of Elpida.

The second-round bids are expected to due later this week.

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• Topics
• Greater China
• North Asia
• Technology
• TMT
• Hony Capital
• TPG Capital
• Distress
• China
• Japan