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* Micron to pay about $750 mln for Elpida equity * U.S. firm will also pay Elpida creditors $1.75 bln * Deal will bring about 24 pct of global DRAM market * Micron also to buy stake in Rexchip By Noel Randewich and Sinead Carew July 2 (Reuters) - Micron Technology Inc will buy failed Japanese chipmaker Elpida Memory Inc for about $750 million in cash, pushing Micron into second place behind market leader Samsung Electronics in the global market for DRAM memory chips. Micron shares rose more than 5 percent after the deal was announced. The acquisition will give Micron chip manufacturing assets at a heavily discounted price and boost its cash flow. Low prices and steadily rising investment costs to implement new technologies have driven consolidation in the highly competitive and cyclical memory chip industry. Buying Elpida doubles Micron's share in the market for DRAM, or dynamic random-access memory, chips, widely used in personal computers. The deal puts it in a stronger position to keep up with industry leader Samsung. Elpida, an Apple Inc supplier, makes chips used in smartphones and tablets as well as computers. "We've always had deep requirements for additional capacity and this puts us in great shape to respond to that," Micron President Mark Adams told Reuters in a telephone interview. "This is a big step in providing some stability to our industry." Along with the cash payment, Micron will also pay Elpida creditors about $1.75 billion in annual installments through 2019 and pay $334 million for a 24 percent stake in Taiwan-based Rexchip Electronics Corp from Powerchip Technology Corp. Elpida owns about 65 percent of Rexchip, which owns a DRAM factory in Taiwan and an assembly and test facility in Akita, Japan. Stifel analyst Kevin Cassidy said the deal brings Micron manufacturing assets, including Elpida's DRAM factory in Hiroshima, Japan, at a discount of billions of dollars. "We estimate this manufacturing capability would cost roughly $6 billion- $8 billion if built new," Cassidy said. Adams said building the equivalent capacity would cost the company about three times as much as it is paying for Elpida. Micron said the acquisition would boost its earnings within 12 months. Elpida has been looking for an investor to sponsor its restructuring after tough market conditions and global competition drove it to file for bankruptcy protection in February, with 448 billion yen ($5.6 billion) in liabilities. It was Japan's largest bankruptcy of a manufacturer. A growing preference for tablets has dampened demand for memory chips used in personal computers, and growing costs to implement new technology have added to pressure faced by DRAM makers. "This probably means we'll see some good supply-demand balance. Fewer players would help the balance, meaning a healthy price environment going forward," said Monika Garg, an analyst at Pacific Crest. The future annual payments by Micron will be paid from cash flow generated by foundry services provided by Elpida, the companies said. Micron, which has posted losses in the past four quarters, had been in exclusive talks for several weeks to buy Elpida. Micron shares jumped 5.1 percent at $6.64. MOBILE CHIPS U.S. private equity firm TPG Capital and China's Hony Capital made a joint offer for Elpida in a final round of bidding in early May, while South Korea's SK Hynix, the world's No. 2 global DRAM chipmaker, dropped out of the bidding. Elpida had a 13.1 percent share of the global market for DRAM chips, while Micron had an 11.6 percent share, according to market research firm IHS iSuppli. Combining the companies would take their share of the market above SK Hynix's 23 percent. Market leader Samsung has about a 42.2 percent market share. Elpida is a strong producer of mobile DRAM, used in increasingly popular gadgets like smartphones and tablets. Micron could also turn Elpida's manufacturing capacity toward making NAND chips -- also used in portable devices -- a decision that Adams said will depend on future market conditions. "They have bought ability for increased flexibility on how they expand future capacity," said RBC Capital Markets analyst Doug Freedman. Yukio Sakamoto, co-trustee of Elpida, said in the statement that the deal would allow for the stable payment of creditor claims and was "a strong testament to the value of Elpida's technologies, products and people." The deals need the approval of Elpida's creditors, the Tokyo District Court and other antitrust agencies.