March 31 (Bloomberg) -- Elpida Memory Inc., Japan's largest computer-memory maker, plans to raise prices 20 percent in April, easing concern the glut that drove chipmakers to record losses in the $31 billion market will persist.

Elpida will inform computer makers that it plans to increase prices 10 percent in the first half of next month and another 10 percent in the second half of April after demand rose and inventory levels fell, Chief Executive Officer Yukio Sakamoto said in a Bloomberg Television interview broadcast today. The shares jumped, leading gains among Asian memory chipmakers.

Sakamoto's proposal clashes with UBS AG and Macquarie Group Ltd. projections that prices won't rebound from near-record lows until the second half of this year, after slumping 85 percent in 2007. Should Tokyo-based Elpida convince its customers, the chipmaker would give rivals such as Samsung Electronics Co. leverage to negotiate the biggest increase in prices since July.

``Elpida's gesture opens the door for other players to follow suit,'' said Eric Yao, who helps manage $152 million, including shares of computer makers, at Truswell Securities Investment Trust Co. in Taipei. ``When prices are elevated, everyone in the industry benefits because producers now lose money on every chip sold.''

Higher prices will help Elpida return to profit in the next 12 months, Sakamoto, 60, said. The operating loss in its fiscal year ending March 31 is ``not far off'' from the 20 billion yen ($201 million) estimated by Mitsubishi UFJ Securities Co., he said, declining to provide specific numbers.

``Now is the right time to raise our pricing,'' Sakamoto said. ``Nobody can make profits at these levels; the market should really return to health now.''

End of Clearance

Inventory clearance should be ``winding up,'' said Yoshiharu Izumi, an analyst at JPMorgan Chase & Co. in Tokyo.

Nanya Technology Inc. may also increase prices in April after demand rose recently, Pai Pei-lin, a spokesman for the Taoyuan, Taiwan-based company, said by telephone today.

Elpida's plan sends a ``positive signal'' to chipmakers, said Eric Tang, a spokesman at Taiwan's Powerchip Semiconductor Corp., which has a production venture with the Japanese company. He declined to say whether Powerchip will raise prices.

Ben Tseng, a spokesman at Hsinchu, Taiwan-based ProMOS Technologies Inc., and Park Hyun, a spokesman at Hynix Semiconductor Inc., declined to comment. Lee Eun Hee, a spokeswoman for Samsung, said she couldn't immediately comment.

Temporary Storage

Dynamic random access memory chips temporarily store frequently used data, helping computer processors run programs faster.

Elpida rose 2.2 percent to close at 3,320 yen on the Tokyo Stock Exchange, after surging as much 8.9 percent. Samsung, the world's largest DRAM maker, climbed 1.6 percent in Korea, while Hynix, the second biggest, gained 5.9 percent. In Taiwan, Powerchip, Nanya and ProMOS advanced.

Overproduction has left Samsung as the only profitable company among major DRAM producers, according to the latest publicly available financial results. Elpida, Nanya and Qimonda AG have reported record losses, while Hynix and Micron Technology Inc. have posted their biggest deficits in at least four years.

Chipmakers are selling the benchmark 512-megabit DRAM chip three cents shy of the $0.88 record low in December, according to Dramexchange Technology Inc., operator of Asia's largest semiconductor spot market.

More Cuts

Roger Chu, an analyst at Dramexchange in Taipei, estimates chipmakers will reduce prices by 5 percent to 10 percent in April.

A 10 percent increase would be the biggest since July 2007, when prices rose 20 percent, according to Dramexchange figures. Makers of DRAM typically negotiate prices twice a month.

Analysts at UBS, Macquarie and CLSA wrote in reports this month that DRAM prices may not rebound until the second half of this year. Goldman, Sachs & Co. said in a March 23 note that prices are unlikely to recover throughout 2008 because of oversupply.

Ichon, South Korea-based Hynix said last week it's considering cutting investments during the second half, possibly joining ProMOS, Qimonda and Nanya in scaling back production plans. DRAM makers will probably reduce capital spending by about 40 percent this year, according to Goldman.

Slowing expansion of capacity may be working. In the past week, fewer DRAM makers have sold chips at prices that ``undermine'' the market, Sakamoto said. Rising demand, stemming from the higher memory needs of Microsoft Corp.'s Windows Vista operating system, is also allowing chipmakers to clear excess inventory, he said.

Price Recovery

Powerchip President Brian Shieh predicted last month that DRAM prices would rise in April. Prices of the 1-gigabit chip may climb to $3.50 by as early as July, he said. The chip has fallen seven cents to $1.81 since Shieh's comments, according to Dramexchange.

Credit Suisse Group said March 11 that prices of the 1- gibabit chip may more than double to $4 in April, while Woori Investment & Securities Co. said March 21 that DRAM prices will probably rebound in the second quarter.

``Things are getting better,'' Sakamoto said. ``DRAM prices have bottomed out and should be improving now.''

To contact the reporters on this story: Mikako Nakajima in Tokyo at mikako@bloomberg.net; Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

Last Updated: March 31, 2008 04:44 EDT