Elpida Memory Inc’s filing for bankruptcy protection in Japan yesterday took a toll on the share prices of its Taiwanese subsidiary, Rexchip Electronics Corp (瑞晶電子), and its partners, as they seek new revenue sources to make up for the loss of orders.
However, Elpida’s dilemma also rekindled hopes of an industry consolidation for some, with Taiwanese DRAM makers teaming up with either US memory chipmaker Micron Technology Inc or the Japanese firm in a bid to combat South Korean chip giant Samsung Electronics Co.
While the fate of Elpida hangs in the balance, Minister of Economic Affairs Shih Yen-shiang (施顏祥) told Central News Agency that the domestic DRAM industry should move forward and seek to create synergy between Taiwan, the US and Japan to counter the strong presence of South Korean rivals in the world market.
However, Nanya Technology Corp (南亞科技), the nation’s top DRAM manufacturer, appeared lukewarm to the idea, saying it was not involved in any merger-and-acquisition talks at present.
“We won’t rule out the possibility, but there is no option on the table now,” Nanya spokesman Pai Pei-lin (白培霖) said by telephone.
Rexchip stock plunged 31 percent to NT$7.30 on the Emerging Stock Market, the first day of trading after a four-day public holiday. There is no daily trading limit on the Emerging Stock Market.
Elpida has been the sole customer of Rexchip, which is 65 percent owned by the Tokyo-based memory chipmaker, since August. Chip manufacturer Powerchip Technology Corp (力晶科技) holds the other 35 percent.
Rexchip said it has suspended shipments to Elpida and will only resume shipments on cash terms. Elpida owes Rexchip US$135.1 million in accounts receivable.
Rexchip posted a loss of NT$6.25 billion last year and had NT$5.8 billion in cash and cash equivalents as of the end of last year.
Shares of Powerchip and chip packager Powertech Technology Inc (力成科技) also plummeted by 6.35 percent and 6.91 percent to NT$1.18 and NT$67.4 respectively. Elpida is a major client of the two firms.
Meanwhile, chip prices rebounded amid expectations that Elpida’s reduced output could ease a prolonged oversupply. The price of benchmark DRAM chips surged 5.85 percent to US$1 per unit on the spot market, according to real-time price information from Taipei-based TrendForce Corp (集邦科技).
The share prices of Nanya and Inotera Memories Inc (華亞科技), its DRAM joint venture with Micron, rallied 6.92 percent and 6.91 percent to NT$4.17 and NT$8.04 respectively.
“We are negotiating with our customers to fix prices for March,” Pai said, adding that Elpida’s filing for restructuring had increased the company’s bargaining chip.
Nanya expects prices to rise further this month, following last month’s less-than-10 percent hike from January, Pai said.
Elpida, ranked No. 4 globally, supplied 12 percent of the world’s DRAM chips in the fourth quarter of last year, TrendForce data showed.
Separately, Powerchip told a media briefing that it would help Rexchip find customers to keep it alive.
Powerchip chairman Frank Huang (黃崇仁) said the company would try its best to help Rexchip maintain normal operations and healthy cash flows as Elpida undergoes financial restructuring.
Under the joint-venture terms, Powerchip is to be responsible for finding buyers for Rexchip now that Elpida is incapable of doing so, Huang said.
Huang added that he was receptive to the idea of integration, but that it would be a long-shot given Elpida’s enormous debts.
“Things are not that simple,” Huang said. “Elpida owes hundreds of billions in debts and the issue of technology integration also needs to be factored in ... Powerchip’s pockets are not deep enough.”
Elpida’s bankruptcy filing has virtually “zero” impact on Powerchip, which owes the Japanese partner NT$70 million in royalty fees and has a minor NT$10 million debt from Elpida, Huang said.
Instead, Elpida’s bankruptcy application could boost Powerchip’s revenue if it is able to secure buyers for Rexchip’s products, he said.
DRAM chips make up 20 percent to 30 percent of Powerchip’s capacity, the chipmaker said.
Huang declined to comment on whether Powerchip plans to take over Rexchip, saying it was better to wait and see how its Japanese parent’s bankruptcy application unfolds.
Japan’s lack of loan relief measures contributed to Elpida’s downfall, he said.
“Taiwanese banks are more supportive in this regard,” said Huang, whose company is in talks with creditor banks for a loan extension to strengthen its financial health.
Additional reporting from Jason Tan
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