UPDATE 2-Japan's Elpida to outsource chips to Taiwan ProMOS

* To outsource DDR3 chips to meet demand for faster PCs

* ProMOS aims to lift 300-mm plant usage rate, diversify

* Elpida up 4.3 pct vs sector's 2.2 pct, ProMOS up 5.8 pct (Adds analyst comment, detail)

By Mayumi Negishi and Baker Li

TOKYO/TAIPEI, Nov 6 (Reuters) - Japanese chip maker Elpida (6665.T) said it will outsource production of advanced PC memory chips to Taiwan's ProMOS (5387.TWO), a move aimed at locking in production capacity in Taiwan, cutting costs, and putting it on stronger competitive footing against its big South Korean rivals.

Elpida, battling U.S. chipmaker Micron Technology (MU.N) to be the world's No.3 DRAM maker, wants to gradually ramp up production as the embattled global DRAM market starts to show signs of recovery.

Its decision to license technology to financially strapped ProMOS could also be partly strategic, analysts said, as it seeks to tie up capacity in Taiwan to compete with Micron's rival Taiwan grouping which includes Nanya Technology (2408.TW). "This is a partly defensive move to secure capacity away from the Micron camp," said Deutsche analyst Takeo Miyamoto.

"If it works well, the additional output of Elpida-technology chips will also help keep overall production costs down."

Under their agreement released on Friday, Elpida will outsource production of advanced DDR3-type DRAM memory chips to Taiwan's No.3 DRAM maker ProMOS.