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"We expect to complete fund raising for enhancing production in early November," Elpida Memory Inc. said in a statement, noting the total sum would be about 170 billion yen.
This will comprise 66 billion yen through new share issuance and 100 billion yen worth of manufacturing facility leasing and debt, it said.
Investors include the two parent firms, US chip giant Intel and the Japanese government-affiliated Development Bank of Japan.
Elpida initially planned to boost capacity for large 300-millimetre (12-inch) wafers on which state-of-the-art chips are made to 16,000 wafers a month from the current 3,600.
However, the planned new funding allows the firm to consider a production capacity increase to 21,000 wafers, it said.
With the production increase, the company will step up dynamic random-access memory (DRAM) supply for use in mobile phones and digital home appliances, it said.
The larger the wafers are, the more microchips are produced from them at lower cost.
The Development Bank of Japan separately said it has decided to invest in Elpida as it values the firm's strategy of focussing on cutting-edge products at its own factory while outsourcing cheaper products to overseas suppliers.
The bank said in a statement that it aimed to help "enhance the competitiveness of Japan's only company exclusively dedicated to DRAM production, which is expected to be a technological driving force in the semiconductor industry."
An official at the bank said its lending to Elpida would be two billion yen.
Leading Japanese high-tech firms NEC Corp. and Hitachi Ltd. spun off their DRAM divisions to set up equally-owned Elpida Memory in December 1999.
It started operations in April 2000 but is fighting a tough battle against US and South Korean rivals in the sector.
The Asahi Shimbun daily said Elpida planned to list its shares on the Tokyo Stock Exchange as early as next year.
A spokesman at Elpida would not go further than to say the company was hoping to make its stock exchange debut sometime in the future.
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