Elpida Memory will cease to be an independent maker of dynamic random access memory chips even if it is acquired by investors from private equity groups. Apparently, Hony Capital, which wants to get Elpida Memory along with TPG Capital, is more interested in ensuring stable supply of Elpida-made memory to Lenovo Group, which is co-owned by Hony's parent Legend Holdings.

According to a Reuters report citing Nikkei business daily, China's Hony Capital plans to sell or outsource the operations at Elpida Memory's Hiroshima DRAM plant to Semiconductor Manufacturing International Corp. (SMIC) if its bid for the bankrupt Japanese chipmaker is successful. Under any scenario, Elpida will have to transfer its production technologies to SMIC and then Hony will either re-equip the Japanese fab, or will simply shut it down while leaving engineers and developers intact.

 Lenovo Group relies on memory chips from Elpida and Samsung Electronics. However, recent pricing disputes between Lenovo and Samsung increased the dependence of the PC maker on Elpida. Therefore, Legend Holdings is interested in obtaining control of Elpida, but in order to gain economic efficiency will have to outsource at least some production from Hiroshima.

While it remains to be seen what exactly happens to Elpida, it appears that Elpida will cease to become a completely independent company in case of any buyer: Micron, SK Hynix  or private equity groups.

Tags: Elpida, SK Hynix, Micron, Holy Capital, TPG Capital, Business