Elpida Memory and China’s Suzhou Venture Group (SVG) will establish a joint venture company by the year end to produce DRAM at a 12-inch wafer fab in Suzhou, China.

Elpida plans to acquire 39% of the shares that will be issued by the new joint venture company, with the remaining 61%  to be held by SVG and the future third party investors. The joint venture will have a site area of 320,000 square metres. Set to begin its operations in the first quarter of 2010, it plans an initial production of 40,000 wafers per month, later to be increased to 80,000. At the initial stage, Elpida’s 50nm DRAM process technology will be used, and then migrated to 40nm after the process is ready. Elpida will buy 100% of the products manufactured at the fab.

Suzhou Industrial Park Administrative Committee will undertake installation of infrastructure and fab construction. Cash for the venture will come from bank borrowings and Elpida, SVG and potential third party shared equity investment of $720 million. Total expenditure for the new fab is estimated to be around $5 billion. X