MEMORY MAKER Elpida will seek to join forces with Micron as it continues to struggle in the DRAM market.
Rumours that Elpida will hook-up with another major DRAM manufacturer have been circulating for some time, but now Micron has been thrust in the frame as the Japanese DRAM manufacturer looks to survive. Margins in the DRAM market have become so tight that Micron CEO Steve Appleton said last month that consolidation is inevitable.
Elpida is reported to be seeking an equity tie-up with Micron, which will see the two firms claim around 20 per cent of the DRAM market. That should put the combined firm into position to compete with market leader Samsung.
Elpida needs to do something quickly, because in March the firm needs to redeem $587m in bonds and repay the best part of $1bn it borrowed from the Japanese government in early April last year. Those repayments loom at a time when the DRAM market is depressed.
Rival DRAM makers Nanya and Inotere both posted fourth quarter 2011 losses of £230m and £130m, respectively. The two firms are Taiwan's second and third largest DRAM manufacturers and their widening losses highlight how bad the memory market is at the moment.
With Elpida needing to pay back over $1bn in loans in the next four months, expect any tie-up to happen pretty quickly, otherwise the DRAM market could soon end up without a Japanese vendor. µ