The government will take action if needed to help domestic DRAM companies, the Ministry of Economic Affairs said yesterday as it sought to assuage fears over the impact of Elpida Memory Inc’s filing for bankruptcy protection in Japan on Monday.
The ministry said in a statement that to ensure stability and continued development for the DRAM industry, government agencies would closely monitor how Tokyo-based Elpida would undergo a court-led reorganization.
Meanwhile, the Taiwan Stock Exchange (TWSE) said it would delist Elpida stock — in the form of Taiwan Depositary Receipts (TDR) — on March 28, following the Tokyo Stock Exchange’s announcement on Monday that it was delisting Elpida’s shares on the Tokyo bourse that day.
Elpida TDRs will be banned from margin trading on the local bourse when the market reopens today after a four-day holiday, meaning all transactions will have to be conducted in cash, the stock exchange said in a separate statement.
Shares of Elpida dropped 23.95 percent to close at ￥254 in Tokyo yesterday. Its TDR ended 6.9 percent lower at NT$7.02 in Taipei on Friday last week.
The ministry and the Financial Supervisory Commission held an emergency meeting yesterday, one day after Elpida filed a petition for corporate reorganization proceedings with the Tokyo District Court to seek protection from creditors for ￥448.03 billion (US$5.53 billion) in debt as of March 31 last year.
Elpida operates a 12-inch fab in Hiroshima, Japan, with a monthly capacity of 120,000 wafers. Its Taiwanese subsidiary, Rexchip Electronics Inc (瑞晶電子), also operates a 12-inch fab with a monthly capacity of 85,000 wafers.
In a statement issued on Monday, Elpida blamed the company’s demise on “the record-breaking strong yen against the US dollar, and the steep fall of the price of DRAM products [because of] fiercer competition in the DRAM industry.”
Sluggish demand for DRAM chips from its customers hurt by the flooding in Thailand last year was another factor behind the company’s failure, it added.
While Elpida said it did not plan to exit the DRAM business and was aiming for restructuring under the Tokyo court’s supervision, Taiwanese companies should take responsive measures to protect their interests in terms of accounts receivable and other issues with the Japanese firm, the ministry said.
Domestic downstream companies should also diversify their sources of supply, the ministry said, as analysts forecast a near-term price spike in memory chips.
“DRAM prices will likely rise (albeit slowly) due to supply shortages,” Samsung Securities’ Seoul-based analysts MS Huang and Eric Yoo said in a note yesterday.
“We expect DRAM prices to stage a mild recovery from the second quarter,” Daiwa Capital Markets analyst Jae H. Lee said in a note on Monday.
The ministry downplayed concern that Elpida’s demise could adversely impact Taiwanese firms that rely on the Japanese company for technology support.
Elpida has made the transition to 30-nanometer (nm) process as its main technology starting this year and is nearing completion of its migration to 25nm process technology.
“There are no such concerns in the near to medium term because Taiwanese firms that have entered into technology cooperations with Elpida have embarked on 3X-nanometer process and are ready to begin mass production,” it said.