Japanese microchip maker Elpida Memory said it is planning to build a manufacturing base in China following a move to shift part of its production to Taiwan.

"China has large population and many factories. We cannot ignore the fact that it is a country that will lead the world economy in the future," a company spokesman told AFP by phone on Wednesday.

Elpida is Japan's only and the world's third largest maker of dynamic random access memory (DRAM) chips used in mobile phones and other personal electronics.

The company, born out of the merger of the microchip operations of Japanese electronics giants Hitachi and NEC amid fierce competition, is struggling amid sharp falls in chip prices and the yen's strength against other currencies.

"I hope to discuss this issue (with Chinese authorities) in the first half of 2012," president Yukio Sakamoto said in an interview with the Yomiuri Shimbun, although he gave no details on where the plant would be or how many people it would employ.

The Elpida spokesman also said there was no concrete schedule yet on talks with the Chinese side, while noting the company had been considering building a production base in China since a few years ago before the financial crisis.

However, he warned that the DRAM market was in the doldrums, adding: "We are continuing to face a very severe business climate," making it difficult for the company to expand its production capacity.

The company said last week it would transfer up to 40 percent of the production at its Hiroshima plant in western Japan to its Taiwanese unit due to the strong yen and plunges in DRAM prices.

The persistently strong yen is a headache for policymakers, who publicly fret over the "hollowing out" of Japanese industry as companies seek to offset the high cost of domestic production for export by moving facilities abroad.

The Japanese unit on Tuesday was trading around 76.53 yen to the dollar.

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