Although neither Elpida Memory nor Micron Technology have confirmed plans to consolidate DRAM manufacturing assets, it is widely believed by analysts that negotiations are being held. Therefore, the death of Steve Appleton, chief executive officer of Micron, last week will clearly impact the further development of the memory industry.
Since May 2011, the DRAM industry has begun undergoing another wave of industry shift. Affected by the economic changes and the weak shipment demand of the PC market, DRAM oversupply again caused significant losses for the majority of the DRAM makers. Merger and acquisitions rumors abound, in particular with talks of Micron and Japanese maker Elpida’s alliance, notes TrendForce market research firm. Should this merger become a reality, the market is expected to once again alleviate the oversupply situation. A portion of the DRAM excess production capacity can be transferred to producing NAND Flash products. However, Micron’s loss of its leader at this critical moment further increased the uncertainty of this potential collaboration. It is expected that Micron’s management must undergo internal management adjustments before the company can further negotiate with Elpida.
According to Nikkei’s earlier reports, Micron’s plan to invest $500 million will most likely be further delayed. At the time, Micron sought out Elpida for its superior mobile DRAM technology to complement the company’s shortcomings in this area. Combined with Micron’s flash memory products, and integrating it into MCP products to further expand its smartphone and tablet market shares. As for commodity DRAM, they can also work with Elpida to jointly develop the technology and makeup for Micron’s 2-year gap in manufacturing process. Micron's related companies including Nanya and Inotera, both have the chance to benefit, topped with Taiwanese DRAM makers mass production capacity, this collaboration between the U.S., Japan and Taiwan would close in the commodity DRAM product manufacturing cost gap with the Korean makers; moreover, they can also gradually migrate to mobile DRAM production, which has a greater market demand, in order to obtain greater gross profit while being able to compete with major Korean makers such as Samsung and Hynix.
Due to Micron CEO and chairman Steve Appleton’s sudden passing, TrendForce believes that not only will Micron and Elpida’s collaboration may be delayed, but it may also affect the development of the DRAM industry in Taiwan, U.Sm and Japan. The industry consolidation may delay further with significant consequences. At the moment, the industry can only hope for Micron to quickly ascertain its management team and future direction, bringing the company back on track for the tasks ahead.