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17th February 2012, 07:25 | #1 |
[M] Reviewer Join Date: May 2010 Location: Romania
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| Elpida DRAM merger would put the wind up Samsung Elpida may well seem like a sinking ship at the moment, but analysts believe that a revitalising merger with Micron would have even Samsung worried. The Japanese DRAM maker has been flailing in the wind for some time now, and lurched to new lows earlier this week after admitting “uncertainty” over its future. Elpida’s share price dropped soon after, with the outlook of even a bail out by the Japanese government looking increasingly unlikely. With debts mounting, and the difficulty in making money in the DRAM market, analysts having been mulling the effects of an exit by Elpida. While it is thought that such a move could help drive the industry back to profitability – indeed, as Elpida’s value dropped, others in the industry were buoyed – there are also concerns that a damaging oligopoly could soon be brought about in the market. However, with Micron waiting in the wings for a merger there is also a chance that the two could team up to give Samsung a run for its money. Currently, Samsung is the only DRAM firm which is able to draw a profit, and owns a large chunk of the market. Analysts at IHS iSuppli believe that if the will-they-won't-they DRAM romance actually happens then there could be a serious challenge to money-bags Samsung. A union between the two would immediately make them the closest challenger to Samsung, with 28 percent of the market compared to Samsung’s 33 percent. This would cut the usual 10 point gap between Samsung and its nearest rival to just five percent, according to the report. In terms of production, an Elpida and Micron merger would reach 374,000 wafer starts per month, edging closer to Samsung’s 433,000 WSPM and leapfrogging Hynix’s 300,000 WSPM. There are some barriers in the way, though. Firstly, there is Elpida’s large and mounting debts. With Elpida thought to be owing in the region of $4 billion, debt-shy Micron is likely to be wary. The strong yen doesn’t make production in Japan particularly attractive either, with cheaper options in Korea and Taiwan. Furthermore, the partnership between Micron and Nanya could throw in problems for a merger with another DRAM player. This, alongside the sad death of Micron CEO Steve Appleton, could well be delaying any potential moves by Micron. Of course, for both Micron and Elpida there could be sunbstantial gains in any merger. This would mean Elpida getting its mitts on some of Micron’s higher selling prices, with Elpida’s DRAM selling at $0.70 per gigabyte compared to $1.34 for Micron. On the other side of the coin it would mean Micron getting stuck into what is one of the few well performing areas of DRAM manufacturing – mobile DRAM. A merger between the two may not serve the rest of the market so well, as one less supplier leaves the stage and consolidation leads to greater leverage over customers. It would also mean, however, that the Samsung oligopoly would be foiled with the swift rejuvenation of Elpida alongside Micron putting the wind up the Korean giant. http://news.techeye.net/chips/elpida...ind-up-samsung |
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