SAN FRANCISCO—U.S. memory chip vendor Micron Technology Inc. has won the exclusive right to negotiate to buy failed Japanese DRAM vendor Elpida Memory Inc. after offering more than $2.5 billion, according to a report by the Reuters news service.
Part of the $2.5 billion bid will go toward paying down Elpida's debt load, which stands at about $5.5 billion, according to the Reuters report. The report quoted an anonymous source. That source also speculated that Micron's bid may be too low for Elpida to accept.
A separate Reuters report Monday (May 7), which cited Japan's Jiji news agency as its source, said Micron would invest more than $3.8 billion in Elpida's fabs in Japan and Taiwan over the next five years.
I am not sure what exactly Micron has planned. As others have pointed out, paying $2.5 billion to acquire fabs and then mothballing them seems unwise. Plus, Micron reportedly gave assurances that it would keep at least Elpida's main fab open. The idea of converting to NAND seems possible, especially considering that Micron is reportedly planning to invest $3.8 billion in the Elpida fabs over the next five years.
Commodity memory is a risky business and Micron is used to betting the ranch at every new technology node. I'm glad to see that they are still willing to be aggressive in the marketplace. Is this what Steve Appleton would have done? I think so.
Considering the different tooling of Elpida vs. Micron, for the first year or two of internally disruptive integration Hynix may take 30% while Micron/Elpida goes under 20%. They may not recover in time, though. So the outcome they sought to avoid got accelerated.