Japanese chipmaker Elpida Memory will seek a capital tie-up with U.S. rival Micron Technology as it struggles with a deteriorating market and stiff competition from South Korean competitors, the Yomiuri newspaper reported on Wednesday.

Elpida, Japan's last remaining player in the market for dynamic random-access memory (DRAM) chips used in personal computers, is battling tumbling prices in the hotly competitive market as customers switch to tablets which use flash memory chips.

Elpida has informed its main bank of its aim to establish an alliance with Micron to secure a combined DRAM market share exceeding 20 percent and better compete with market leader Samsung Electronics, the Yomiuri reported.

No comment was immediately available from Elpida. Micron had no comment on the report.

The firm's shares rose more than 6 percent in early trade after the report, which also said Elpida's bank had called on it to produce a plan by Wednesday for improving its financial position.

Speculation has swirled around possible equity partners for Elpida, which has about 145 billion yen ($1.89 billion) in debt due by early April.

(Reporting by Nobuhiro Kubo; Writing by Edmund Klamann; Editing by Joseph Radford)

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