Micron to snatch up Elpida Memory

Nothing like some consolidation in the memory market to start the week. Earlier this morning, Micron announced that it’s entered a "sponsor agreement" to acquire Japanese memory manufacturer Elpida Memory.

The transaction will involve a ¥60-billion ($750-million) cash payment. It’s also going to involve an additional ¥140 billion ($1.75 billion), which Micron will pay in annual installments until 2019 to pay off Elpida’s debt. Elpida filed for bankruptcy protection back in February; at the time, Reuters said its debt added up to about $5.6 billion.

In a "related transaction," Micron is going to pay 10 billion Taiwanese dollars ($334 million U.S.) to purchase 24% of Rexchip Electronics, a Taiwanese manufacturer of DRAM chips. Elpida already has a 65% stake in Rexchip, so once the proceedings go through, Micron will end up with a 89% stake in the Taiwanese firm. Micron says the firm’s assets include "a 300mm DRAM fabrication facility located in Taiwan; and an assembly and test facility located in Akita, Japan."

According to Reuters’ coverage of the deal, acquiring Elpida will double Micron’s slice of the DRAM market. It will also make Micron the world’s second-biggest DRAM manufacturer after Samsung. Right now, Reuters says, Elpida and Micron own 13.1% and 11.6% of the market, respectively, while Samsung has a larger 42.2% share.

Comments closed
    • HisDivineOrder
    • 7 years ago

    Remember when the hard drive industry shrank from 4 to 2 in a 2 month period and then God got angry and flooded the whole area in a mad, bloody swell of water and rage?

    And then prices rose never to lower again apparently?

    Yeah, fun times. Memory’s just pressin’ on his last nerve.

    • Pantsu
    • 7 years ago

    Micron buying Elpida was probably the best thing for DRAM market, at least from a consumer perspective. Having two large Korean corporations having all but a duopoly in DRAM would have meant memory prices going sky high. Now they’ll have to keep competing against Micron.

    By the looks of it though, DRAM is nearing the end of its life, sincce all of the memory companies are readying MRAM, ReRAM and other new non-volatile technologies that should be available to the mass market in a few years. This might bring big changes to the market place.

    • crabjokeman
    • 7 years ago

    So less competition means prices will go up?

      • OneArmedScissor
      • 7 years ago

      Prices of what? The obsolete technology they trapped themselves into peddling to a shrinking market? Possibly, but that’s of no consequence to you and I.

      The price of RAM in general won’t go up any more than the price of expansion cards went up because PCI cards led to “less competition” between ISA cards. The innovators will just move on to something better that people actually have a demand for.

        • crabjokeman
        • 7 years ago

        Huh??? I build systems, and I use RAM (which, last time I checked, was not “obsolete”). Of course the price od memory affects me.

          • OneArmedScissor
          • 7 years ago

          I didn’t say RAM was obsolete. I said completely the opposite.

          The DDR3 supply is not shrinking yet. Just the list of companies not accomplishing anything is.

      • esterhasz
      • 7 years ago

      Elpida is bankrupt because memory has fallen to prices where it is very difficult to break even. Miscalculations were made, but it is also a bit hard to predict an economic crisis. Unsustainably low prices in the present lead to higher prices in the future (perhaps even for DDR4), because nobody wants to invest in a domain. We should hope that prices recover quickly.

    • ronch
    • 7 years ago

    Interesting to see how Micron, which has a smaller market share, is buying Elpida, which has a larger share.

    Edit – Yes, obviously, market share alone is just one aspect of a company. I’m just saying this from that perspective alone.

      • dpaus
      • 7 years ago

      [quote<]Interesting to see how Micron, which [s<]has a smaller market share[/s<] [u<]is profitable, well-capitalized and almost debt-free[/u<], is buying Elpida, which [s<]has a larger share[/s<] [u<]over-extended itself, got into way too much debt, couldn't service it, and is now bankrupt[/u<].[/quote<] There, fixed that for ya.

        • Kurotetsu
        • 7 years ago

        +1

        Market share alone does not represent the success of a company.

          • MadManOriginal
          • 7 years ago

          You mean selling at a loss and making up for it with volume [i<]isn't[/i<] a viable long-term strategy?!

            • derFunkenstein
            • 7 years ago

            Indeed. Who knew?

            • trackerben
            • 7 years ago

            Not if you got your stuff mandated by Congress as a shared essential good whose benefits are worth subsidizing and enforcing universal enrollment for. Which absence in a citizen’s life will result in him getting taxed for non-compliance, or else him getting compliance for not getting taxed enough. Or whatever. Just don’t make it personal insurance, that’s already been cornered by the biggest guys in town. Twitter Team Obama and Robert’s Court for details.

            After all, why extract revenue from the present when you can get your country to subsidize your stuff by milking the rosy future?

            • tfp
            • 7 years ago

            But we can make it up in volume!

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