UPDATE 1-Elpida may get govt guarantee extension to talk with Micron-Yomiuri

* New Micron CEO believed interested in a deal-Yomiuri

* Elpida faces upcoming debt deadlines

* Elpida has flagged going concern doubts

* Elpida asking for approval to double shares it can issue

By Nobuhiro Kubo

TOKYO, Feb 24 (Reuters) - Japan may give Elpida Memory Inc an extension on government guarantees for loans and preferred stock so that it can have more time to talk with Micron Technology about a capital tie-up, the Yomiuri newspaper said on Friday.

The newspaper said Micron's new chief executive, Mark Durcan, was believed to view potential talks with debt-laden Elpida positively and that the companies would negotiate with a view to strengthening their chip line-ups for smartphones.

Elpida, Japan's last remaining maker of dynamic random access memory (DRAM) chips, has been battered by a slump in chip prices, and this month flagged doubts about its ability to continue as a going concern as it had not been able to agree on support from banks and the government.

The company, a supplier to Apple Inc, was reported last month to be in talks with U.S.-based Micron, but hopes for a tie-up stalled when Micron CEO Steve Appleton died in a small plane crash in early February.

The Yomiuri said Micron was urging the government and its banks to continue to support the chipmaker, which has some 400 billion yen ($5 billion) in interest-bearing debt, but there remains some caution on the part of the banks to do so.

On Thursday, Elpida, which competes with South Korea's Samsung Electronics and Hynix Semiconductor , announced plans to double the number of common shares it can issue, pending approval at a shareholders' meeting on March 28 -- a move that could pave the way for a white knight rescue.

Elpida shares fell 5 percent on Friday, hurt by dilution concerns after the announcement about a potential share issue, giving up some of their 12 percent gains made a day earlier after regulatory filings showed units of Goldman Sachs and Credit Suisse firms had lifted their collective stakes in the firm. The stock has fallen about 70 percent over the past year.

Elpida, which has seen chip prices fall as consumers switch to tablets that use flash memory, is racing against the clock to meet debt deadlines in the next two months. It faces a late-March redemption of 15 billion yen in corporate bonds and an early-April deadline to repay 77 billion yen in loans. If the government decided to extend its guarantees, that would encourage a state-backed bank to roll over 10 billion yen in loans, keep it from pulling out of its preferred stock in the company as well help reassure its private lenders.

Elpida received an injection of funds from the Development Bank of Japan in 2009 - the first Japanese firm to get aid under a scheme to help businesses hit by the global financial crisis.

There have also been reports that Japan's government is looking to combine the struggling system chip operations of Renesas Electronics, Fujitsu Ltd and Panasonic Corp, with production outsourced to GlobalFoundries, a California-based company that could buy Elpida's chip plant in Hiroshima as part of that deal.