Japan's Elpida Memory, the world's third-largest memory chipmaker, plans to acquire the DRAM production operations of Taiwan's Powerchip Technology, the Nihon Keizai Shimbun reported Monday. The two sides hope to wrap up negotiations by March 31.
Experts believe the move is part of Elpida's efforts to boost its competitive edge against rivals Samsung Electronics and Hynix Semiconductor of Korea, the world's first and second-largest DRAM manufacturers.
Elpida is estimated to have posted a 20 billion yen operating loss in the fourth quarter of 2010, due to plummeting DRAM prices. Over the same period, Samsung Electronics posted an operating profit of W1.8 trillion from its DRAM operations, while Hynix achieved W420 billion (US$1=W1,122). If prices continue to drop, Elpida projects it would face another crisis and wants to bolster its strength by bulking up output capacity.
Powerchip, ranked sixth in the DRAM market, apparently believes it would require excessive investments to develop technology on its own and is seriously considering handing over the entire operation to Elpida. If the deal is successful, the global DRAM market would be dominated by three main camps: Samsung and Hynix, Elpida and Taiwanese confederation, and Micron Technology of the U.S.
According to market research firm iSuppli, Samsung Electronics had a 40.7 percent share of the global DRAM market as of the third quarter of last year, followed by Hynix with 20.9 percent, Elpida with 16.1 percent and Micron Technology with a 10.5 percent stake. Taiwan's Nanya Technology and Powerchip controlled 4.1 percent and 2.7 percent of the market.