Japan's DRAM memory chip industry officially collapsed today

Japanese DRAM memory-chip industries have collapsed under South Korean competition. Elpida Memory, Japans last-standing memory-chip company and also the world’s third-largest DRAM maker, filed for bankruptcy Monday in a Tokyo court, saying it had accumulated debts of 448 billion yen (US$5.5 billion) which it could not service for. The Tokyo Stock Exchange said Elpida shares would be delisted one month later on March 28.


The company was unable to finance upcoming debt repayments due in March and April 2012, and has posted operating losses for five consecutive quarters. This would be the biggest bankruptcy among manufacturers in post-war Japan. The fall of Elpida would greatly enhance the market position for Samsung and Hynix, the largest and second largest DRAM maker, both South Korean-based companies.

Shares of Elpida’s Taiwanese rivals soared in Taipei Exchange. Taiwan’s Nanya Tech at one point rose by 7 percent, while Powerchip added 3.97 percent in the trading session. South Korea, Japan and Taiwan control nearly 88% of world’s DRAM production.

Elpida said it was unable to recoup massive investments in production capacity in 2006 and 2007, which led to an oversupply that sent unit prices lower. The global economic downturn then hit in 2008, and other factors such as the strong Japanese yen and flooding in Thailand last year were more than it could absorb. Elpida has hinted last week that its ability to continue surviving as a company is in doubt as talks to solve its debt situation stalled.

South Korean DRAM market share getting bigger every quarter

While Elpida’s fate is still unknown, analysts say that if the company were to cease all production it could force computer makers to raise prices or lower the memory capacity of their products. This would also affect the growing smartphone market, where margins are razor thin, as Elpida is also a major manufacturer of mobile DRAM. Elipida’s Japanese and overseas plants produce a total 15% of world’s DRAM.

“DRAM market share will be even more unbalanced, dominated by makers with leading technology. The DRAM market will be one step closer to an oligopolistic state, thereby leaving PC and mobile makers with less bargaining power if Elpida exits the industry,” market data vendor DRAMeXchange said in a research note.

Oligopoly is a system in which a small number of companies control the total market supply of a specific product. In an oligopoly, price competition is essentially non-existent. Samsung controlled around 42% of the DRAM while Hynix approximately 24%.


Elpida will attempt to search for an outside investor to turn around its business, it said. Some of the options Elpida mulled include moving all its production base for low-priced DRAM chips to Taiwan for costs cutting, or formed alliance with U.S. rival Micron Technology Inc. and Taiwans Nanya Technology Corp to compete with South Korean manufacturers.

Elpida was formed through the 1999 merger of NEC Corp.'s and Hitachi Ltd.'s memory businesses. Fujitsu Ltd. abandoned the memory-chip business that same year, and Toshiba Corp. announced its withdrawal in 2001, making Elpida the last major Japanese DRAM maker. Germany’s DRAM industry fell after largest maker Qimonda filed for bankruptcy and liquidated its operation in 2009. While Micron is the last-standing DRAM manufacturer in the U.S.

The Japanese government, which has habit of propping up failing companies previously such as Tokyo Electric Power Co. and Japan Airlines Corp, has decided to lose its sole national manufacturer and effectively surrender the industry to South Korea.

South Korean companies have firm grip over DRAM market

Facing intense competition, the Taiwanese DRAM industry, likewise, are struggling to keep afloat as falling prices and stiff competition saddle them with huge losses. Taiwan’s Industrial Technology Research Institute has partnered with US-based semiconductor giant Intel Corp. to develop a new type of computer memory chip, the technology for which will be transferred to local DRAM makers. This could be the last chance for the island’s struggling DRAM makers to survive. If it fails, the Taiwanese DRAM industry could be wiped out by South Korea.

Taiwan’s DRAM makers lag behind their primary South Korean rival Samsung by two generations of technology. They have seen their market shares shrink and their revenues decline, rendering them unable to invest in improving their technologies.

A possible merger between U.S. Micron Technology Inc. and Japans Elpida has the potential to dramatically redraw the competitive landscape of the DRAM space, yielding a new No. 2 player that could challenge Samsung Electronicss industry leadership. But one of the main obstacles is Elpida’s US$5.5 billion debt loads, which is too high and may break Micron’s neck.


DRAM chips are memory storage devices used to store each bit of data, serving as the ‘main memory’ in personal computers, laptop, video game consoles and smartphones. With the fall of Japan, only Taiwan and the United States now stand in the way to South Korea’s total market domination.


http://blogs.wsj.com/deals/2012/02/27/j … ankruptcy/

http://www.arnnet.com.au/article/416622 … =399285820

http://www.bloomberg.com/news/2012-02-2 … eview.html

http://www.baltimoresun.com/business/sn … 1285.story

http://www.reuters.com/article/2012/02/ … 0B20120227

http://www.businessweek.com/news/2012-0 … lunge.html


crap… price will increase soon?

Dmas, i think can confirm the price of all type of RAM to rise again, better prepare budget to buy the RAM before the price rise

won’t be buying anything anytime soon…
not unless something “Kong” in my current system…

haha… seem like u kinda inactive in mc liao… now saving my budget to get a SSD, hopefully the price wont rise since it similar to RAM

me? Inactive? sure or not?