After months of speculation, it appears that we finally have a winner in the Elpida derby—based on offer of $2.5 billion, U.S. memory specialist Micron Technology Inc. is taking home the prize of exclusive negotiations for the Japanese DRAM vendor, says Reuters. Elpida filed for bankruptcy back in February, citing debts of about $5.5 billion. After an initial flurry of interest, the field thinned out bit by bit with entrants like Toshiba and Hynix reportedly pulling out of the running.
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?