Aug. 7--TOKYO -- Struggling chipmaker Elpida Memory Inc. said Friday it has signed a contract to receive around 30 billion yen in investment from the state-backed Development Bank of Japan as it seeks to tap de facto public funds to maintain its global competitiveness.

Elpida, the world's third-largest and Japan's sole maker of dynamic random access memory chips, will issue two types of preferred shares to the DBJ and the payments will be made on Aug. 31, the company said in a statement.

In June, the government picked Elpida as the first recipient under its emergency financial aid program introduced for non-financial companies hit hard by the global economic downturn.

The sale of the preferred shares is part of a financial package totaling 160 billion yen in bank loans and additional investment including from its Taiwanese technology partner.

If the DBJ's investment fails, the government says it will cover 50 to 80 percent of the losses incurred by the bank with taxpayers' money.

Elpida President Yukio Sakamoto said earlier he wants to use the funds to invest in cutting-edge chip technology as the company seeks to narrow the gap with rivals in South Korea and the United States.

The chipmaker also sought to secure cash as it sank into the red for two straight years on the erosion of chip prices and shrinking demand for DRAM chips, used mainly in mobile phones and personal computers.

The company incurred a group net loss of 44.45 billion yen in the April-June quarter, smaller than the loss booked during the January-March period, on the back of improved DRAM prices.

The Ministry of Economy, Trade and Industry said earlier that the DBJ will also lend around 10 billion yen to Elpida. It will also receive about 100 billion yen in syndicated loans from commercial banks, including the Bank of Tokyo-Mitsubishi UFJ.

Taiwan Memory Co., a memory chip company set up by the Taiwanese government, will also invest about 20 billion yen in Elpida.

Elpida's shares closed Friday trading up over 12 percent at 1,340 yen on the Tokyo Stock Exchange following reports on the signing of the investment deal.

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