Elpida, a struggling maker of dynamic random access memory, has granted Rexchip Semiconductor, a joint-venture between itself and Powerchip Semiconductor, right to sell memory it produces to third-parties. According to DRAMeXchange analysts, the destiny of Rexchip will determine the short-term future of the whole dynamic random access memory industry.
Due to Elpida’s high debt, it was decided at Rexchip’s board meeting last week that when Elpida and Powerchip are no longer able to pay for Rexchip’s products, Rexchip will be allowed to ship to some module makers on its own - a clear indication Elpida cannot decide what to do next. As it seems that Elpida will be unable to avoid liquidating current assets, the possible sale of subsidiary Rexchip has become the greatest variable affecting future DRAM industry capacity.
TrendForce indicates, if Rexchip switches hands, 65K starts per month will be gradually migrated to the process of the maker’s new parent company, which will take six months at minimum. Not only will capacity utilization rate see a huge drop, yield rate will need time to improve as well. Such a situation would greatly benefit the current DRAM oversupply situation – commodity DRAM would have a chance to see balanced supply and demand in second half of 2012, and the possibility of DRAM price recovery would increase considerably.
According to DRAMeXchange research, major PC OEMs have shown increased demand towards suppliers, a move to guard against a supply chain break in the wake of Elpida’s bankruptcy protection filing. It is reported that Elpida is currently drafting several corporate restructuring proposals they must present to the government within six weeks of filing. Meanwhile, the Japanese government is evaluating whether or not Elpida holds additional value for other industries or the nation as a whole.
As Elpida has finished development on the 25nm process, the maker is not far behind the Korean manufacturers. Furthermore, with 17% of the global mobile DRAM market, Elpida’s impact is greater in the mobile DRAM sector than in the commodity DRAM sector. While Toshiba has indicated an Elpida merger or acquisition is unlikely, they have not ruled out the possibility of a technological partnership. By working together to develop MCP (multi-chip packaging) and target the mobile device market, the makers would stand a chance going up against the Korean manufacturers.