Oct. 8 (Bloomberg) -- Elpida Memory Inc., Japan’s biggest computer memory-chip maker, said it may spend as much as 40 billion yen ($452 million) to increase output of smaller 40 nanometer chips to account for half of its production.

The Tokyo-based company plans to begin mass-production of the devices this year, Elpida’s spokesman Hiroshi Tsuboi said by telephone today. The chipmaker will pace the investment, reported earlier by the Nikkei newspaper, to match market conditions, Tsuboi said.

Chipmakers such as Elpida, the industry’s leader Samsung Electronics Co. and Hynix Semiconductor Inc., the world’s second-largest memory chipmaker, are reducing chip size to increase the number that can be cut from a single wafer, lower costs and combat falling prices. Switching to the smaller format from the current 50-nanometer technology will allow Elpida to increase per wafer chip output 44 percent, it said.

Elpida rose 5.2 percent to 1,169 yen as of 10:36 a.m. on the Tokyo Stock Exchange.

A nanometer, one billionth of a meter, measures the size of transistors within a chip where lower numbers indicate more advanced technology that enables smaller, more efficient chips to be made.

Prices of benchmark dynamic random access memory, or DRAM, which temporarily holds data and helps computer processors run multiple programs simultaneously, have almost tripled this year after falling 62 percent in 2008, according to Dramexchange Technology Inc., operator of Asia’s biggest spot market for semiconductors.

For Related News and Information: Elpida’s earnings: 6665 JT <Equity> TCNI ERN <GO> Stories on the chip industry: NI SEM <GO> Stories on technology in Japan: TNI JAPAN TEC <GO> Stories on today’s most-read technology news: MNI TEC <GO> For benchmark DRAM price: DRAM72 <Index> GP <GO>

Last Updated: October 7, 2009 21:52 EDT