Elpida Announces Bankruptcy, DRAM's Opportunity?

To the Elpida event,  TrendForce appoint out three possibilities including the availability of funds, debt restructuring; on disposal of plant, short-term pains; declares bankruptcy, the price soared. The details as:

1. Elpida Receives Funds, Debt Managed
Current rumors indicate the Japanese government intends to provide funds to save Elpida, under the condition that Japan's domestic DRAM and NAND flash product lines are consolidated. Furthermore, in order to make inroads into the mobile market, Elpida will lower the proportion of commodity DRAM produced at its Hiroshima fab, increasing mobile DRAM wafer starts instead. However, due to Elpida's limited NAND flash technology, the maker would still be unable to compete with the Korean manufacturers in the MCP (multi-chip packaging) sector. Therefore, there is a possibility that Toshiba, with second place in NAND flash revenue, will form a technological partnership with Elpida under the guidance of the government. If successful, the makers would be able to target the high-growth tablet PC and smartphone markets with MCP products, enabling them to go head-to-head against the Korean manufacturers.

Commodity DRAM would be produced mainly by Rexchip, and technology migration to the 25nm process would be accelerated. From a supply and demand perspective however, even if Rexchip handles the commodity DRAM production, the commodity DRAM market will still remain in a state of oversupply -average DRAM price will not increase by much. As for Elpida's liabilities, the maker may also negotiate for a debt-equity swap or even a partial debt write-off with the banks. It is unlikely Elpida will back out of the DRAM industry completely, as that would provide the least benefit to DRAM chip price.

2. Elpida Sells Fabs, Short-term Suffering Due to Technology Migration Adjustments
If the Japanese government gives Elpida a loan extension, the maker must find a way to survive on its own. After consolidation of the nation's LCD industry, the Japanese government has set their sights on the domestic semiconductor industry as well - merger discussions are currently underway with Renesas Electronics, Fujitsu, and Panasonic. The government also intends to divide IC design and chip production into separate businesses, with a future venture by INCJ managing  IC design . Chip manufacturing may go to Elpida's Hiroshima fab, which would lower the maker's commodity DRAM risk.


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