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Micron-Elpida merger could shake up DRAM market

Posted: 16 Feb 2012     Print Version  Bookmark and Share

Keywords:DRAM market  merger  research firm 

Micron-Elpida merger has the potential to redraw the competitive landscape of the dynamic random access memory (DRAM) space, said IHS Inc. A union between the two companies—the object of rampant rumours swirling around the industry at the moment—would bring the combined entity to the second position, challenging Samsung Electronic' industry leadership.

With a combined capacity of 374,000 wafer starts per month (WSPM), the newly merged company would have a 28 per cent share of worldwide DRAM manufacturing capacity. While Samsung has 433,000 WSPM or 33 per cent share of global capacity. On their own, Elpida and Micron usually place in the No. 3 and No. 4 spots, respectively.

The reconfigured DRAM terrain also would mean that South Korea's Hynix Semiconductor Inc., from South Korea, falls to third place given a 23 per cent share of capacity, or 300,000 WSPM, from its current perch as runner-up to Samsung," IHS.

"Overall, a Micron/Elpida merger would present Samsung with its most powerful rival yet," said Mike Howard, senior principal analyst for DRAM and memory at IHS. "Samsung is usually 10 percentage points ahead of its next competitor, but the merger would trim it's formidable market share lead by half, to 5 percentage points."

However, the marriage between U.S. memory player and the Japanese DRAM player would have to face down a number of potent challenges, Howard pointed out, including Elpida's debt, strong yen, as well as the third possible challenge could be Micron's ongoing partnership with Taiwanese-based Nanya Technology. Moreover, the death of Micron CEO Steve Appleton in an experimental airplane crash could complicate matters and delay potential consolidation.

Also, the benefits of a more stable market resulting from the merger probably would outweigh the drawbacks of having one less supplier, Howard remarked.

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