June 9 (Bloomberg) -- Elpida Memory Inc., Japan's largest memory-chip maker, will spend 500 billion yen ($4.56 billion) in the next three years to build a dynamic random access memory plant in the southwestern prefecture of Hiroshima.

Elpida, a semiconductor joint venture between Hitachi Ltd. and NEC Corp., will make an official announcement on the factory tomorrow, company president Yukio Sakamoto said. The plan would create the world's biggest factory making dynamic random access memory chips, the Nihon Keizai newspaper reported earlier.

Construction will be financed by the sale of new shares and bonds, the Nihon Keizai said, without citing anyone. Elpida will also borrow money from banks, the report said.

Elpida expects demand for DRAMs will increase for use in mobile phones and digital household appliances, according to the Nihon Keizai. The company also plans to boost monthly output capacity for 300mm wafers at an existing Hiroshima plant to 28,000 by year's end from 21,000 currently, the report said. Combined output at the two plants is projected to be about 90,000 by 2007 when the new facility is at full capacity, according to the report.

(NEN 6-9)

To contact the reporter on this story: Hiroshi Suzuki in Tokyo at at Hsuzuki5@bloomberg.net

Last Updated: June 8, 2004 18:51 EDT