Elpida’s Potential Exit From DRAM Industry Could Have Huge Consequences

In the near future, should Elpida be unable to repay its debts which are due in April and goes insolvent, it would mark its exit from the dynamic random access memory (DRAM) industry. The consequences would affect not just the DRAM industry, it would impact the PC industry as a whole. The company has been trying to recover but even with captial backed by the Japanese government things are not looking good, as Elpida still owes $505.8 million to the government, with another $1.02 billion in short-term bank loans. Negotiations are ongoing between Elpida and its creditors in an effort to find an influx of cash to alleviate the situation. A potential Long-term solution, comprised of an alliance with Micron or Toshiba, is still in discussion. Unlike Qimonda’s situation when they announced their bankruptcy in 2009, Elpida has the size and technology to compete with its rivals, having recently started 30 nm-class mass-production and the testing of 25 nm-class production. Simply put, Elpida has far greater potential when it comes to contributing to the industry, should it survive. If Elpida leaves, the industry will find itself in a state of imbalance, dominated by Korean DRAM manufacturers like Samsung and Hynix, as well as American Micron Technology. Should Elpida fail to survive, it will bring the DRAM market another step closer to oligarchical price-controls.