In the aftermath of the acquisition, the DRAM market is likely to look quite a bit different. According to IHS iSuppli, Samsung currently holds first place among global DRAM suppliers, with about 433,000 wafer starts per month (WSPMs), while Hynix, Elpida, and Micron rank second, third, and fourth, respectively. The Miron/Elpida deal would give the new entity a total capacity of around 374,000 WSPM, vaulting them past Hynix into second place. And it would be a close second. “Overall, a Micron/Elpida merger would present Samsung with its most powerful rival yet,” says Mike Howard, senior principal analyst for DRAM & memory at IHS. “Samsung is usually 10 percentage points ahead of its next competitor, but the merger would trim its formidable market share lead by half, to 5 percentage points.”
The deal could yield a whole much greater than the sum of parts. Back in February, Howard noted that the average selling price for Micron DRAM was $1.34/GB, compared to $0.70/GB for Elpida. This would indicate that the two companies address different customer bases, which stands to benefit the combined entity. Meanwhile, the Japanese manufacturer has established a foothold in the mobile DRAM market, a key growth area for the technology now that consumers are leaning increasingly toward tablet computing platforms.
Amid the rumors and speculation, Micron is keeping its sights firmly fixed on the future. According to the Jiji news agency via Reuters, Micron plans to invest $3.8 billion over the next five years in Elpida's factories. Meanwhile, it just announced a 4-Gb DDR4 DRAM module, developed in collaboration with Nanya. Micron is currently sampling devices with volume production slated for the fourth quarter of this year. The product line will eventually boast x8, x16, and x32 components for the soldered down space, with initial speeds up to 2400 MT/s, increasing to 3200 MT/s.
In the aftermath of the acquisition news, Micron shares ended the day at $6.50, down from $8.88 at the end of February.
What do you think the merger is going to mean for the DRAM market and for Micron/Elpida?
I suspect some of the delay around DDR4 finalization also relates to their eventual need to license NLST IP.
Netlist says they will be the first proprietary standard which will be adopted by the industry – for DDR4.
Perhaps JEDEC were waiting to see how Inphi (makes LRDIMMs by copying NLST IP) will fare against NLST HyperCloud - turns out Inphi has failed to challenge NLST IP - as USPTO has reaffirmed '537 and '274 patent with all claims intact - which is going to make NLST vs. Inphi a slam-dunk.
LRDIMMs are copying NLST IP.
DDR4 is even closer to NLST IP - as they have dispensed with the asymmetrical design in the LRDIMMs - and gone further and adopted the symmetrical design of the NLST IP.
The debt/loss cycle for DRAM mfgs is well known and has always been an issue. In the market where only the biggest can eventually survive (due to economies of scale), Samsung and Micron look like an interesting match. It's not clear where Hynix fits in at this point. I think Samsung strategy in DRAM may have to change further in light of this acquisition. The NAND flash/DRAM mix has already been an interesting wrinkle and new memory technologies are coming over the next five years.
Elpida did not have self-sustaining operations, financially, and it's going to be that way for a while even under Micron, who had negative earnings the last few quarters. The internal friction that is inevitable means the whole is less than the sum of its parts, initially. But that period of initial chaos is enough for Samsung and Hynix to take almost 100%.
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