Elpida, the Japanese chipmaker, said it was uncertain about whether it could continue as a business, after talks with its lenders about securing new financial support had stalled.

The company, which supplies memory chips to computer manufacturers like Apple, is due to repay Y92bn ($1.2bn) in bonds and loans by the beginning of April, but has not so far been able to agree a deal with the trade ministry, the Development Bank of Japan and its main lenders.

The company was forced to issue a press release on Monday night, reversing its announcement on February 2 that it expected to agree a financing deal by the end of March.

“Elpida is discussing details of measures to be taken in the future … however, it has not reached an agreement as of now, and therefore, material uncertainty about its assumed going concern is found,” the company said on Monday night.

Shares in Elpida fell more than 20 per cent on Tuesday morning in Tokyo.

Even if the company does reach an agreement in time, Yukio Sakamoto, Elpida’s president, has warned that the company would still have less money than its competitors for the capital-intensive investment that it needs to keep up with changes in the market.

Although Elpida is the world’s third-biggest maker of dynamic random access memory (D-Ram) chips, the most common chips found in computers, it has struggled to compete against Samsung Electronics, which has more than half of the market.

Prices for D-Ram chips fell 53 per cent in the second half of last year, as the computer industry has shifted towards mobile devices and tablets which use fewer, but more advanced D-Ram chips. The spot price for D-Ram chips has fallen below what it costs to produce them, and analysts have been expecting either consolidation or failure among the smaller companies in the market.

“There has long been a feeling that some sort of shake-out would happen among the tier-two players,” said one London-based chip analyst. “My sense is that Elpida won’t be the last company to falter.”

Larger competitors such as Korea’s Samsung and Hynix Semiconductor, are making faster progress in switching to chips for smartphones and tablets, while Elpida has had to cut back on capital spending.

Elpida’s revenues fell by more than a third to Y59.8bn (£486m, $762.7m), compared to a year ago, in the three months ended in December, and net losses widened 12.6 per cent to Y42.1bn, its fifth consecutive quarter of losses.

The company was reported by the Japanese media to be in talks with Micron of the US and Nanya of Taiwan, over a potential tie-up that would help all three save on manufacturing costs. However, the company dismissed the rumours of a combination earlier this month, saying it would focus on ways to return to profitability on its own.

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