Elpida plans to raise DRAM prices

TOKYO (Reuters) - Elpida Memory Inc (6665.T: Quote, Profile, Research, Stock Buzz), the world's No. 3 maker of DRAM chips, plans raise its prices again in June in a bid to return to profitability, its CEO said on Thursday.

Makers of dynamic random access memory chips, most commonly used in computers, are emerging from an industry-wide slump while remaining under pressure to spend more on technology that will allow them to squeeze more functions onto chips.

The world's No.3 maker of DRAM chips will ask customers to pay more -- although it has not decided on a percentage increase -- aiming for a $3 price tag on its 1 Gigabit chips, said Elpida Chief Executive Officer Yukio Sakamoto at the Reuters Global Technology, Media and Telecoms Summit.

"We will tell them we won't supply chips to them if they don't agree," he said, adding that the tactic had worked four times before. But asked if the strategy would work again, he said, "I don't know."

Elpida's clients agreed to pay 10 percent more for DRAM in April from end March, and have since agreed to a little less than a 10 percent rise in early May and a further 5 percent to 7 percent rise in late May.

Elpida, which trails South Korea's Samsung Electronics (005930.KS: Quote, Profile, Research, Stock Buzz) and Hynix Semiconductor Inc (000660.KS: Quote, Profile, Research, Stock Buzz), tumbled to a deep quarterly loss in January-March, hit by chip prices that have fallen below manufacturing costs.

The company has its fingers crossed on a return to profitability in June, helped also by demand from a major third-generation mobile phone handset maker in the U.S. and game makers.

Chip makers have been reining in chip shipments to match tempered expectations for Microsoft Corp's (MSFT.O: Quote, Profile, Research, Stock Buzz) Windows Vista demand while inventory still remains on shelves.

"Now is the time to ramp up investment," Sakamoto said.

He said the company would decide on whether or not to lift its planned investment of 100 billion yen for the year to March in the next month or two.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Mayumi Negishi)