Micron also provides certain financing support for Elpida capital expenditures
US based semiconductor firm Micron Technology has signed an agreement to acquire bankrupt Japanese chip maker Elpida Memory for $2.5bn, to expand its position in the market for memory chip used in computers and mobile devices.
Micron will pay $750m in cash upon closing of the deal, while the remaining $1.75bn will be paid in annual instalment through 2019 from cash flow generated from Micron's payment for foundry services of Elpida.
In February 2012 Elpida had filed for bankruptcy protection and has a debt of $5.3bn.
Under the deal Micron will discharge the pre-petition debt obligations of Elpida under the corporate reorganisation proceedings.
The agreement also calls for Micron to provide certain financing support for Elpida capital expenditures and maintain Elpida's operations as well employees.
Elpida currently operates a 300 millimetre (mm) DRAM fabrication facility in Hiroshima, Japan as well as holds 65% stake in Rexchip which operates a 300mm DRAM fabrication facility in Taiwan; and an assembly and test facility located in Akita, Japan.
Separately, Micron has also signed an agreement with Powerchip Technology to acquire the Powerchip group's 24% share of Rexchip Electronics for approximately $334m.
The acquisition of assets from Elpida and Rexchip will increase Micron's wafer manufacturing capacity by about 50%.
Micron CEO Mark Durcan said, "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 transactions are expected to close in the first half of 2013 following regulatory approval.