Micron may offer up to JPY$300 billion (TWD$110 billion) for Elpida, and the likely integration of the companies’ DRAM capacity will bring about revolutionary change to the DRAM industry supply chain.
Looking at 1Q12 revenue market share figures, Micron and Elpida came in third and fourth with 11.6% and 12.4% of the market, respectively, still a good distance behind second-place maker SK Hynix, who came in with 23.9% market share.
After Micron and Elpida have integrated, their combined market share will bring the Micron team’s market share (Micron, Inotera, Elpida, and Rexchip) to nearly 24%, surpassing SK Hynix’s 23.9% to become second only to memory giant Samsung.
As TrendForce has previously stated, the DRAM industry is heading towards becoming an oligopolistic market – the emergence of three major DRAM players will help DRAM chip price gradually stabilize, bidding farewell to the price-slashing market competition of the past.
Micron Team Ready to Take on Korean Heavyweights
After Micron acquires Elpida, the Micron alliance will combine the DRAM capacities of major Taiwanese, U.S., and Japanese makers. The new team will be able to go up against the Korean heavyweights in terms of both commodity and mobile DRAM.
Looking at technology migration, Elpida is not far behind the Korean makers in either yield rate or migration speed for both commodity and mobile DRAM. The Japanese supplier’s 30nm process yield rate is nearly mature, while the 25nm process is in the testing phase at Elpida’s Hiroshima fab.
Elpida subsidiary Rexchip is expected to begin testing on the 25nm process in 3Q, and its mass production schedule is the same as its parent company’s. Elpida’s performance in the mobile DRAM sector is impressive as well – according to TrendForce, the maker’s mobile DRAM revenue market share already reached 8.8% in 1Q12.
Cooperation with Micron’s flash memory team would turn Elpida into an even more formidable opponent in the mobile DRAM sector.
Elpida’s Technology to Benefit Taiwanese DRAM Makers
Looking at Micron, the maker has always had close ties with first-tier PC OEMs in terms of commodity and server DRAM – its NAND flash products are internationally competitive. Micron and Elpida’s integration will be beneficial in terms of both product diversification and capacity increase – the adjustments will help improve the oversupply situation that has long plagued the DRAM industry.
Together, Elpida’s mobile DRAM products and Micron’s NAND flash chips can be used to produce MCP (multi-chip packaging) products, which will help increase entry to mid-level smartphone market penetration rate, thereby significantly improving cost structure and profitability for the makers.
As for Taiwanese DRAM manufacturers, Micron’s acquisition of Elpida’s commodity and mobile DRAM technology will be a boon to Taiwanese memory makers. If Nanya and Inotera have access to Elpida’s technology, the makers will be able to speed up migration to the 25nm process.
With the Taiwanese manufacturers’ strong manufacturing capabilities, they will be able to quickly begin mass production and lower cost structure. If the tri-national alliance is successful, not only will the makers have a chance to take second place in the global DRAM revenue ranking, but it is estimated that their total capacity will exceed 400K wafer starts per month, or 40% of DRAM industry capacity. The team will become the third DRAM heavyweight, and the DRAM industry will be dominated by three major players.