Hynix Semiconductor Inc, the world’s second-largest chipmaker, has submitted an initial proposal to bid for Elpida Memory Inc, the Japanese chipmaker that filed for bankruptcy last month.
The South Korean company will decide whether to make a final bid after due diligence, it said in a regulatory filing yesterday.
Toshiba Corp was also considering a bid, a senior executive for the Tokyo-based company said yesterday, asking not to be identified because the discussions are private.
Bidders for Elpida’s assets may gain as much as 12 percent of the global market for DRAM chips, as the Tokyo-based company tries to revive itself after filing for bankruptcy with liabilities of ¥448 billion (US$5.5 billion) on Feb. 27. Hynix is trying to narrow the gap with industry leader Samsung Electronics Co and fend off Micron Technology Inc as chip prices are dampened by slowing PC sales.
‘A MUST’
“Participating in the initial stage of bidding was a must for Hynix because their competitors are known to be bidding,” said Song Myung-sun, a Seoul-based analyst at HI Investment & Securities Co. “They need to be part of the process to assess Elpida’s situation more clearly. Also, you need to go in there to have a better idea what competitors are looking for.”
Hynix shares dropped 4.1 percent, the most in three months, to close at 29,250 won in Seoul trading, while South Korea’s benchmark KOSPI was little changed. Toshiba declined 1.9 percent to ¥364 in Tokyo, while Japan’s Nikkei 225 Stock Average lost 0.3 percent.
“The market is disappointed, as the DRAM business requires a lot of money,” said Mitsushige Akino, of Ichiyoshi Investment Management Co in Tokyo.
LOW CHIP PRICES
Falling chip prices and a stronger yen eroded Elpida’s earnings, exacerbating the Tokyo-based company’s troubles after it received financial support from the government and lenders in 2009. The chipmaker, whose customers include Apple Inc, was delisted from the Tokyo Stock Exchange on Wednesday.
DRAM prices plunged to a record low last year after PC shipments missed analyst forecasts. The price of the benchmark DDR3 2-gigabit DRAM fell to a record US$0.71 in November, compared with US$4.85 on Sept. 1, 2010, amid slowing PC sales, according to DRAMeXchange, Asia’s biggest spot market for the chips.
Elpida gained approval on March 23 for president Yukio Sakamoto to lead its revival plan after filing for Japan’s biggest bankruptcy in two years. The company plans to submit a restructuring plan by Aug. 21.
Toshiba may invest in Elpida alone or as part of a group, and isn’t interested in all of the company’s assets, the Toshiba executive said.
Elpida plans to choose a sponsor in May for its revival plan, the executive said.
“If Toshiba comes in and takes Elpida, they can be a serious competitor to Samsung and Hynix,” said Brian Park, an analyst at Tong Yang Securities Inc in Seoul.
An investment would give Toshiba DRAM capacity in addition to its current production of NAND flash memory, he said.
Kaori Hiraki, a spokeswoman for Toshiba, declined to comment, and a spokesman for Elpida declined to comment or be named.
MICRON
Boise, Idaho-based Micron has been in talks with Elpida since the end of last year and is considered a candidate to sponsor the Japanese chipmaker, the Nikkei Shimbun reported earlier, without saying where it got the information.
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