Tue, Feb 28, 2012 - Page 12 News List

Elpida seeks bankruptcy help

CORPORATE FAILURE:Both Elpida Memory and its major subsidiary, Akita Elpida Memory, sought shelter from the courts against liabilities totaling almost ¥456 billion

AFP and Bloomberg, Tokyo

Yukio Sakamoto, president and chief executive officer of Elpida Memory Inc, left, bows during a news conference in Tokyo, Japan, yesterday after the company announced it was filing for bankruptcy protection.

Photo: Bloomberg

Japan’s Elpida Memory Inc filed for bankruptcy protection yesterday, days after one of the world’s biggest microchip makers admitted it was struggling to solve its debt problems.

In the biggest corporate failure in Japanese manufacturing history, the company went to the courts to seek shelter against liabilities totaling ¥448 billion (US$5.53 billion).

Separately, its major subsidiary Akita Elpida Memory Inc also filed for bankruptcy protection with ¥7.9 billion of liabilities, the company said.

“We sincerely regret any inconvenience caused ... for creditors as well as the people who have been supporting us,” Elpida said in an English-language statement. “We have concluded that, if we continue the business by ourselves, we will face cash shortage soon.”

Elpida president Yukio Sakamoto, once hailed as a corporate turnaround specialist in the chip sector, was expected to step down, Kyodo News said.

Elpida is the world’s third-largest maker of DRAM chips used in mobile phones and other personal electronics, but the punishingly high yen, global market volatility and fierce competition with South Korean and Taiwanese rivals have made life difficult.

“Its balance sheet has not been stable amid intensifying competition in the international DRAM market as well as due to its high costs,” said Tokyo Shoko Research, which specializes in bankruptcy data.

The move came after Elpida failed to find ways to survive via possible tie-ups and requests for fresh bank loans, said another research firm, Teikoku Databank.

Elpida shares rose 0.6 percent to ¥334 in Tokyo yesterday before the announcement. The shares were suspended for trading after the market closed. The stock has declined 6.7 percent this year after slumping 62 percent last year.

Bankruptcy for Elpida would help Taiwanese rivals such as Nanya Technology Corp (南亞科技), according to Andy Wei, who helps manage US$80 billion at Eastspring Investments (瀚亞投資), the Asia asset management unit for Prudential Plc.

“In the short term, this may be positive news for Taiwan DRAM companies as there would be a supply shortage,” Wei said. “This will be good for the industry in the long term if the restructuring or takeover of Elpida means better control of capacity.”

Elpida’s bankruptcy would be the nation’s biggest since Japan Airlines Corp sought protection in January 2010 with ¥2.32 trillion in liabilities, according to data from Tokyo Shoko Research.

Elpida was established in 1999 from a merger of the chipmaking divisions of NEC and Hitachi. It became Japan’s only DRAM maker in 2003, when Mitsubishi Electric sold its chip division to the company.

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