Elpida Memory, the world’s third largest maker of dynamic random access memory (DRAM), may close the gap significantly with Hynix Semiconductor in the coming months as the company has reportedly reached agreement to form a DRAM conglomerate with three Taiwan-based memory makers.

Elpida plans to integrate its operations with Powerchip Semiconductor Corp., ProMOS Technologies as well as Rexchip Electronics Corp., reports Nikkei business daily publication from Japan. According to the report, Powerchip and ProMOS “are expected to come under the umbrella of Rexchip”, which will become a subsidiary of Elpida by late March, 2009.

According to iSuppli market tracking agency, in Q4 2009 Elpida controlled 15.5% of the DRAM market in terms of revenue, whereas ProMOS’ and Powerchip’s market shares were 2.10% and 1.7%, respectively. Meanwhile, Samsung Electronics and Hynix Semiconductor had revenue shares of 30% and 20.8%, respectively. Once Elpida integrates all three Taiwan-based manufacturers, its portion of revenue on the global market will increase to about 19.3% or higher, which will transform it into as influential company as Hynix.

Elpida may sign an accord with Powerchip Rexchip Electronics, ProMOS Technologies and the Taiwanese government on Wednesday. Elpida’s alliance could be eligible for Taiwanese public funds worth about ¥100 billion ($1.056 billion), the report by Nikkei claims.

Taiwanese government, Elpida and Taiwan-based makers of DRAM have been working on consolidating the country’s memory industry for months now after the market conditions got considerably worse because of lowering demand despite of manufacturing at full capacity at many makers.

Since the information comes from an unofficial source, neither of the parties involved in talks has commented on the news.

Tags: Elpida, ProMOS, Powerchip, Rexchip, Business