Wed, Feb 29, 2012 - Page 12 News List

Elpida bankruptcy has mixed impact

WINNERS AND LOSERS:The Japanese memorychip maker’s filing is expected to hurt Rexchip and Powertech Technology, but will benefit the Nanya-Micron camp

By Amy Su  /  Staff Reporter

Elpida Memory Inc’s bankruptcy protection filing might have a mixed impact on the nation’s memorychip industry.

Memory module maker Adata Technology Co (威剛科技) said in a filing to the Taiwan Stock Exchange yesterday that the bankruptcy protection filing announced by Japan-based Elpida, one of the world’s biggest memorychip makers, had no impact on it due to its diversification strategy of purchasing memorychips.

Memorychip makers Winbond Electronics Corp (華邦電子) and Powerchip Technology Corp (力晶科技) said Elpida’s bankruptcy protection filing had a limited impact on their business, because they have no accounts receivable due from Elpida.

Powerchip, which has a production and marketing partnership with Elpida, said it had stopped its DRAM supply to Elpida in the fourth quarter of last year amid the sector’s slowing demand.

However, Elpida’s bankruptcy might bring Rexchip Electronics Corp (瑞晶電子), a local PC DRAM venture between Powerchip and Elpida that is entering the mass-production stage of Elpida’s 30-nanometer (nm) products, under some pressure.

Despite Rexchip having stopped shipments to Elpida temporarily on Monday, the company reported US$76.4 million in accounts receivable from Elpida for last month and posted US$58.7 million in sales to Elpida, company statistics showed.

That total of US$135.1 million might not be paid to Rexchip in the short term, affecting the company’s cash flow, the company said.

“We will discuss with Powerchip, our major stockholder, seeking a new sales model to Elpida in the future, which will basically be cash transactions,” Rexchip said in its stock exchange filing.

Walton Advanced Engineering Inc (華東科技), a domestic memory assembly and testing service provider, will also be affected by Elpida’s bankruptcy.

Powertech Technology Inc (力成科技), the nation’s biggest computer memorychip packager, will also likely be majorly affected by Elpida’s bankruptcy, a Barclays Capital’s research report said yesterday.

Barclays Capital analyst Andrew Lu (陸行之) said the brokerage house expected to see a one-off loss for Powertech of as much as NT$6 billion (US$203 million) to NT$7 billion, or NT$8 to NT$9 per share, on earnings in a worst-case scenario, compared with the consensus estimate for the company’s earnings per share of NT$7.62 this year and NT$9.48 next year.

However, the loss would only happen in the worst-case scenario, which means Powertech has not yet decided whether to collect its accounts receivables from Elpida and write off its loss, Lu said.

Powertech said its accounts receivables due from Elpida totaled NT$4.5 billion as of yesterday, accounting for 5.4 percent of its assets.

In the meantime, Barclays’ global DRAM research team sees the main beneficiaries of Elpida’s bankruptcy as Samsung Electronics Co and Hynix Semiconductor Inc of South Korea, as well as US memorychip maker Micron Technology Inc.

That means the Nanya-Micron camp, such as Nanya Technology Corp (南亞科技) and Inotera Memories Inc (華亞科技) in Taiwan, might also benefit.

Powerchip spokesman Eric Tang (譚仲民) also said he expected Elpida’s bankruptcy to be positive for the memorychip market.

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