Reeling under 448 billion yen ($5.55 billion) debt, Japan's only DRAM chip maker Elpida Memory today filed for bankruptcy protection, as the world's third-largest DRAM memory chip maker got bogged down with falling prices and increased competition from its Taiwanese and South Korean rivals.

In what has become the biggest bankruptcy filing by a Japanese manufacturer, the maker of dynamic random access memory, or DRAM, chips will be delisted from the Tokyo Stock Exchange on 28 March.

Elpida  had posted losses in each of the past five quarters, and had amassed liabilities $5.5 billion, according to a filing with Japan's finance ministry.

Formed through the 1999 merger of the DRAM operations of NEC Corp and Hitachi Ltd, Tokyo-based Elpida was listed on the first section of the Tokyo Stock Exchange in 2004, a year after acquiring the DRAM unit of Mitsubishi Electric Corp.

Anticipating a huge future global demand for DRAM memory chips, Elpida poured millions into plants, equipments and expanding production capacity, from 2006 through 2007.

Prices of DRAM started falling in 2007 but the decline accelerated in 2008 due to the global economic downturn that begun in 2008, which made the Japanese government bail out the company in 2009 with ¥30 billion ($375 million) in emergency loans through its financial aid program that was launched in the same year.

But the company, which employs more than 3,000 people, further deteriorated due to prices falling by 85 per cent, a stronger yen and increased competition from rivals like Taiwan's Nanya Technology Corp and South Korea's Samsung Electronics and Hynix Semiconductor.

Samsung controls 45-per cent share of the global DRAM market, while Hynix holds 22 per cent share and Elpida 12 per cent.

Samsung escaped Elpida's fate by diversifying into specialty chips for smartphones, tablet computers and servers that enabled it to report a 7.34 trillion won ($6.5 billion) operating profit last year.

Companies like Fujitsu had stopped manufacturing DRAM memory chips in 1999, while Toshiba withdrew in 2001 to make chips used in tablet PC's and smartphones.

Elpida, Hynix and other DRAM chips manufacturers lost a combined $14 billion in the past three years, according to Bloomberg calculations.

According to DRAMeXchange, Asia's biggest spot market for the chips, DRAM prices plunged to a record low last year after PC sales declined, while sales of Apple's iPad surged. (Smartphones and tablets PC's use 75 per cent fewer chips than a laptop or a desktop computer).

The price for DDR3 2-gigabit DRAM fell to a record low of 71 cents in November 2011, compared with $4.85 on September 2010.

Elpida's bankruptcy is Japan's biggest since Japan Airlines filed for bankruptcy protection in 2010 with 2.32 trillion yen debt.