UPDATE 1-Japan's Elpida to raise $200 mln from Kingston

* Elpida to raise $125 mln in shares, $75 mln in conv bond

* To use funds for capital investment

* Elpida struggling to keep up with rivals in DRAM market

TOKYO, April 2 (Reuters) - Japanese memory chipmaker Elpida Memory Inc 6665.T said it would raise about $200 million by issuing new shares and convertible bonds to U.S. DRAM module supplier Kingston Technology.

Elpida, which is struggling to keep pace with Samsung Electronics (005930.KS) and Hynix Semiconductor (000660.KS) in the DRAM chip market, said it would raise 11.7 billion yen ($125 million) by selling Kingston 6.47 million shares.

Elpida also plans to issue a $75 million convertible bond maturing in 2013 to Kingston.

Elpida said it would use the funds for capital investment as it aims to advance to finer circuitry to produce DRAM chips more efficiently.

Hit by the global economic downturn, Elpida received an injection of public money last year. [ID:nTOE60R07I] (Editing by Chris Gallagher)