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SRAM market sees merger, vendor exit

Posted: 02 Sep 2009     Print Version  Bookmark and Share

Keywords:SRAM  market consolidation  merger 

Consolidation continues in the SRAM market, observed Needham & Co. LLC.

U.S.-based SRAM maker GSI Technology Inc. recently acquired the assets related to Sony Corp.'s SRAM product line.

"The deal eliminates Sony as a competitor. Additionally, we expect the NEC/Renesas combination to further consolidate the SRAM market," said Needham analyst Edwin Mok in a report.

Japan chipmakers NEC Electronics Corp. and Renesas Technology Corp. said that they would delay the signing of a merger agreement until the end of September. This is the second time in a month the companies have delayed the prospective merger.

Meanwhile, one small SRAM player—Sony—is leaving the business. "Sony has a relatively small business that only sells SigmaRAM; however, since GSI's high-speed SRAM is based on the same standard, we see a natural fit with very little integration risks. Clearly, the deal strengthens GSI's leadership in the SRAM market, and possibly opens some new opportunities for GSI," Mok said.

SigmaRAM is a family of SRAM products jointly defined by the SigmaRAM Consortium. The organisation was formed with the goal of creating an open, JEDEC-standard memory product family targeting the networking and telecommunication markets.

Meanwhile, at closing, GSI paid Sony approximately Rs.25.40 crore ($5.2 million) in cash. GSI will make a further cash payment to Sony of approximately Rs.8.30 crore ($1.7 million) following a post-closing adjustment to reflect actual product inventory on hand at closing.

GSI will also make future cash payments based on the sale of certain acquired SRAM products over an eight quarter period. The acquisition will be accounted for under the purchase method of accounting.

Based on historical sales data and current sales projections, GSI believes that the new product line will generate additional revenues of approximately Rs.4.88 crore ($1 million) in Q3 ending Dec. 31, 2009 and expects that the new product line should generate quarterly revenues of approximately Rs.9.77 crore ($2 million) by the quarter ending Sept. 30, 2010.

- Mark LaPedus
EE Times

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