Micron Technology Inc., the largest U.S. memory-chip maker, agreed to buy a 35.6 percent stake in Taiwan's Inotera Memories Inc. from rival Qimonda AG for $400 million in cash.

Micron and partner Nanya Technology Corp., which already owns 35 percent of Inotera, are taking full control of its two memory-chip factories. To help finance the purchase, Micron has obtained $285 million in loans from ``strategic sources'' at ``favorable terms'' the Boise, Idaho-based company said yesterday.

The Inotera deal is the latest step in Micron Chief Executive Officer Steve Appleton's 10-year quest to try rein in competitors' runaway production spending, which has led to gluts and tumbling prices in the $30 billion-a-year industry. Micron's losses widened more than five-fold in the past fiscal year as memory-chip production outstripped demand.

Micron fell 33 cents, or 8.5 percent, to $3.55 in New York Stock Exchange composite trading Oct. 10. The shares have lost 91 percent of their value in the past eight years.

The transaction allows Micron to get hold of a plant for a fraction of the cost it would take to build it from scratch, Chief Operating Officer Mark Durcan said yesterday in a telephone interview. A brand new factory would cost ``in excess of $4 billion,'' he said.

For Munich-based Qimonda, majority owned by Infineon Technologies AG., the cash may prove a lifeline. Analysts including Daniel Berenbaum of Cowen & Co. have said it might not survive the current industry slump.

Neubiberg, Germany-based Infineon wrote down the value of Qimonda by 1 billion euros ($1.39 billion) in April.

Chasing Samsung

Micron, the world's fourth-largest producer of memory chips, is trying to eliminate rivals and get closer in size to industry leader Samsung Electronics Co.

Not counting Suwon, South Korea-based Samsung, the 10 biggest memory-chip manufacturers are all losing money. Micron's seven straight quarterly losses, totaling $2 billion, have driven the shares down 51 percent this year.

The transaction may not be the last acquisition Micron makes as it looks for more chances to get hold of capacity cheaply.

``There's a lot of people under a lot of stress,'' said Durcan. ``In that kind of environment, there's opportunity and we're just trying to be judicious as we pick our way through those.''

DRAM Plants

Micron's dynamic random access memory chips, or DRAMs, provide the main memory in personal computers. It can take more than a year and $3 billion to build new DRAM plants, making it hard to react to short-term price changes. Shutdowns are so expensive that assembly lines run night and day, even when the chips sell for less than it costs to produce them.

The average price of DRAM chips has been less than $2 for a year. Below that level, companies lose money, Bob Gujavarty, a Deutsche Bank analyst in San Francisco, said in a telephone interview in September.

Micron already has narrowed the field. Micron bought Texas Instruments Inc.'s memory business in 1998. In 2001, it purchased Toshiba Corp.'s memory plant in Manassas, Virginia, and Kobe Steel Ltd.'s KMT Semiconductor unit.

A failed attempt to take over South Korea's Hynix Semiconductor Inc. in 2002 left Appleton with too small a piece of the market to influence prices by limiting production.

At the end of the second quarter, Micron had a 10.9 percent share, behind Samsung, Hynix and Tokyo-based Elpida Memory Inc. Qimonda had 8.9 percent, according to El Segundo, California- based research firm iSuppli Corp.

Source:Bloomberg