There was no single factor that drove Qimonda into the abyss. Rather, it was a combination of at least three factors, each one representing a potentially deadly danger by itself.

The first is the current oversupply in the DRAM market, which has generated massive price pressure. The second is the global economy downturn; the third is the financial crisis which triggered the downturn.

In Qimonda's case, however, the financial crisis had an additional effect: It dried up the possibility to invest in innovation and production equipment that would have enabled the company to keep pace with with rivals.

Qimonda was simply to small a player in the DRAM market to benefit from economies of scale, said market researcher Malcolm Penn of Future Horizons. "In this market, there is no room to be small," Penn said. "One needs economies of scale." The lack of scale contributed to investors' disinterest in Qimonda, he added. "Qimonda suffered from serious underinvestment. This led into a graveyard spiral which they could not escape."

From the perspective of the global DRAM market, it will be beneficial if one or several players fold, Penn added. However, besides the fact that Qimonda is insolvent The German DRAM manufacturer might be the first victim of the DRAM oversupply, but certainly not the last. "Several other companies will go the same way," Penn predicted. "A lot of Taiwanese companies are in the same position as Qimonda."

In terms of technology, Qimonda was in better shape than was its funding position. However, the company's promising buried word line technology came too late — and it might have been an obstacle in potential takeover negotiations, Penn said. "This technology is rather unique, and hence difficult to integrate in a potential investor's manufacturing landscape."

While Qimonda's demise may be a relief to some in the DRAM market, it could be catastrophic for the semiconductor industry in Dresden, Germany. Qimonda is the largest chip maker in the region, ahead of Qimonda's parent company Infineon, microprocessor manufacturer AMD and a handful of minor chip vendors, including ZMD and X-Fab. Along with AMD, Qimonda runs a semiconductor mask center which now faces an uncertain future. In addition, dozens of suppliers and service companies in the region depend on the semiconductor industry.

Parent company Infineon also might be hit by Qimonda's bankruptcy. Infineon still holds 77.5 percent of Qimonda shares. While the company has entirely written off the market value of its DRAM subsidiary, it can't rule out future liabilities. In a statement, the company said it had increased its provisions for pending antitrust and security law claims as well as for other potential future liabilities.

Infineon has set aside funds in the triple-digit million euro range for such cases at a time when Infineon is itself suffering from the crisis in the automotive industry, one of its largest customers.