Elpida is Japan's last hope in PC memory chips in an industry dominated by Samsung Electronics and Hynix Semiconductor Inc.
Elpida lost the No 3. slot to U.S. chipmaker Micron Technologies in January-March.
Years of price slides and weak consumer demand have hammered the sector, dragging DRAM makers into the red and forcing Germany's Qimonda to file for insolvency this year. Elpida reported a record operating loss of 147 billion yen in the year ended March 31.
"This ensures that Elpida will survive, but can it win?" said Yoshihiro Shimada, chief analyst at research firm SPI Analysis. "That depends on how quickly it can catch up to its competition in shrinking its chips."
Elpida, which posted its sixth straight quarterly loss in January-March, has fallen behind Samsung in using smaller circuitry on its DRAM chips, which are mainly used to power PCs.
Smaller circuitry on semiconductors allows makers to pack more power onto smaller chips and lower per-chip costs, but it also yields more chips per wafer and exacerbates oversupply.
Elpida said it would use the funds to shrink chips and expand output of advanced DRAM chips at its Hiroshima plant in southwest Japan to cut costs by 20 percent.
If Elpida upgrades its production technology, "that would be bad news for Korean makers which have benefitted from price competitiveness with cutting-edge production lines," said Song Myung-sup, an analyst at HI Investment & Securities in Seoul.
Elpida will cement ties with Taiwanese makers, Elpida Chief Executive Yukio Sakamoto said, adding that TMC is considering taking a 10 percent stake in Elpida, while Elpida is also considering a stake in TMC.
"The last battle in the DRAM sector is starting," forcing further consolidaton, he said at a news conference.