Japan’s Elpida Memory Inc and US-based Micron Technology Inc said yesterday they had begun merger talks, confirming days of market speculation.
Elpida, the world’s third-largest maker of DRAM chips, said in a statement it was beginning negotiations with Micron over the company’s financial problems.
“Such decision has been made under the Tokyo District Court approval on May 10, 2012, allowing Elpida’s trustees to enter into negotiation of an agreement with Micron,” Elpida said in an English-language statement.
The Japanese chipmaker filed for bankruptcy protection with the Tokyo court under the Corporate Reorganization Act on Feb. 27, the biggest corporate failure in Japanese manufacturing history, as it reported ￥448 billion (US$5.62 billion) of liabilities as of the end of February.
Micron, the world’s fourth-largest DRAM chipmaker, confirmed in a separate statement that it was engaged in discussions with Elpida’s trustees to acquire the Japanese firm’s business, following an intense bidding process to support Elpida during its corporate restructuring.
If Micron’s acquisition of Elpida goes through, the US company is expected to overtake South Korea’s Hynix Semiconductor Inc as the world’s second-largest DRAM chipmaker after Samsung Electronics Co, DRAMexchange, a research division of Taipei-based TrendForce Corp (集邦科技), said in a report on Wednesday.
In addition, an oligopoly may be formed in the global DRAM industry in which chip prices will “gradually stabilize, bidding farewell to the price-slashing market competition of the past,” DRAMexchange said.
The price of the benchmark DDR3 two-gigabit DRAM chip reached US$1.06 yesterday, compared with a record low of US$0.71 in November, at a time when the DRAM industry was in a down cycle, DRAMexchange said.
A potential Micron-Elpida deal will also help Taiwanese DRAM firms such as Nanya Technology Corp (南亞科技), Inotera Memories Inc (華亞科技) and Powerchip Technology Corp (力晶科技) to gain advanced process technology and improve product quality through their current partnerships with either Elpida or Micron, the researcher said.
Separately, Powerchip announced yesterday its board had agreed to a plan to cut 60 percent of its capital, or NT$33.24 billion in capitalization, and use the money to make up a widening financial deficit.
In the first quarter, Powerchip reported a net loss of NT$5.56 billion, which was the company's fifth consecutive quarterly loss. The first-quarter loss had improved from a loss of NT$8.87 billion in the prior quarter, but was still higher than the loss of NT$4.97 billion posted in the same quarter of last year.
The Hsinchu-based company said in a filing to the Taiwan Stock Exchange that it planned to cancel 3.32 billion shares. The cancelation will reduce Powerchip’s paid-in capital to approximately NT$22.16 billion, the filing said.
Powerchip’s board of directors also approved the issue of as many as 6 million new shares via a private placement, with proceeds raised from the private placement to be used to “strengthen the firm’s working capital, repay bank loans, buy raw materials and acquire equipment and machinery,” according to the filing.