Elpida May Team Up with Toshiba or Micron for Survival

From X-bit Labs: In a bid to survive on the market of dynamic random access memory, Elpida Memory, which has to pay over $1.4 billion in April, 2012, the company may try to merge with its rivals. A possible combination will include Elpida, Micron and Toshiba, which has all chances to become the largest DRAM makers in the world, according to DRAMeXchange, a division of TrendForce.

Heading into the end of 2011, Elpida’s financial difficulties were revealed. Rumors abounded, not only of Elpida seeking a bailout from the Japanese government, but also of Toshiba stepping up to take over. If this rumor is true, Elpida will be the first maker to fall in the harsh DRAM winter.

Currently, Elpida’s cash is down to ¥110 billion, approximately $1.429 billion, but the company’s total debt amounts to around $6.26 billion, 60% of Elpida’s total assets. ¥37.4 billion (approximately $486 million) of Elpida’s total debt comes from the Japanese government’s recapitalization program and must be repaid by the end of April 2012. In the face of this pressing deadline, Elpida has no choice but to look elsewhere for funds, which has fueled industry speculation of a merger or acquisition.

Amidst numerous conjectures about Elpida’s possible integration, the Japanese government plays an important role. In addition to possibly extending repayment of Elpida’s loan, the government is actively involved in integration prospects. Besides potential government intervention, there is also a chance that Elpida’s longtime strategic partners Kingston and Powertech Technology (PTI) will offer assistance.

Since the second half of 2011 there has been frequent news of Kingston purchasing Elpida chips at discounted prices, hoping to help Elpida make it through the DRAM price downturn by decreasing the company’s losses somewhat.

View: Article @ Source Site