Elpida’s filing may spur DRAM oligopoly: TrendForce


TAIPEI — The dynamic random access memory (DRAM) industry’s shift toward an oligopoly may accelerate if Japan’s Elpida Memory Inc. decides to quit the market after filing for bankruptcy protection, a Taipei-based research firm said.

Elpida’s announcement that it was seeking bankruptcy protection on Feb. 27 came as a shock to the long suffering DRAM industry, and its impact on the whole industry could be as potent as that of Germany memory chip-maker Qimoda’s exit in 2007, TrendForce said in a report.

“Elpida’s move to file for bankruptcy protection reflected the fact that the dire imbalance has plagued the DRAM industry over the years, which is the main factor behind Elpida’s inability to survive,” the report said of the industry that has long been plagued by oversupply.

Unlike Taiwanese DRAM makers, Elpida was not lagging behind the industry in core manufacturing technologies, the report said.

Elpida was also the largest DRAM supplier in the spot price market, holding an irreplaceable market position, according to the report.

Given that Elpida has already established itself as a major DRAM suppler for smartphones and tablets, if the Japanese vendor exits the market, only Samsung Electronics Co. and Hynix Semiconductor Inc. will remain in the mobile DRAM market, resulting in an oligopoly, the report said.

The continuous expansion of the two South Korean makers, with Samsung already holding a 50-percent share of the mobile DRAM market, is a potential concern for the supply chain management of PC OEM and hand-held device makers, it added.

In the fourth quarter of 2011, Elpida had a 17-percent global market share in the mobile DRAM market, ranking third behind Samsung’s 53.8 percent and Hynix’s 20.8 percent.

Elpida’s decisions of how to handle its production capacity at its Hiroshima plant or future strategies for its subsidiary Rexchip will have a significant effect on the industry, TrendForce said.

Rexchip is a joint venture between Elpida and Taiwanese memory chip-maker Powerchip Semiconductor Corp.

In terms of the PC DRAM market, Elpida ranked fourth in the industry in the fourth quarter of 2011 with a 12-percent market share, trailing U.S.-based Micron Technology Inc. by 0.1 percentage points.

Elpida’s market share was greater than the combined market share of all Taiwanese memory manufacturers, with Nanya Technology Corp. at 3.6 percent, Winbond Electronics Corp. at 1.8 percent, ProMOS Technologies Inc. at 0.6 percent and Powerchip at 0.1 percent.