Micron Technology, one of the top makers of dynamic random access memory (DRAM), may acquire the stake of Infineon Technologies AG in Qimonda, a troubled maker of DRAM from Munich, Germany.

Micron has been in negotiations to take over all or part of Infineon’s 77.5% stake in the publicly traded memory-chip maker Qimonda, according to a report from The Wall Street Journal that cites sources familiar with the situation. It remains to be seen whether Micron actually proceeds with the plan, as the two companies could not agree on terms due to a tough situation on the market of DRAM.

Boise, Idaho-based Micron has been looking forward acquiring other memory chip makers for many years now, but has not made any serious acquisitions so far. No surprise, the company decided to make a proposal to take over Qimonda now that the market of DRAM is relatively slow and Qimonda, which owned 16% market share just two years ago now commands only 8.9%, according to market research firm iSuppli.

“The industry megabyte bit growth grew by a stunning 17% sequentially during the second quarter, blowing iSuppli’s forecast of 10%. The unit growth doesn’t seem to be slowing down either and is even higher than that of the first quarter. The positive side is that the PC market has been sound. However, oversupply may be inevitable in the third quarter due to OEM’s aggressive inventory build-up during the second quarter,” said Nam Hyung Kim, director and chief analyst for memory ICs/storage systems at iSuppli.

What is especially negative for the DRAM industry nowadays is that the industry wide revenue in Q2 2008 declined 8% year-over-year to $6.779 billion and dropped 36% from $10.591 billion in Q4 2006.

Qimonda, which has about 13 500 employees, had a net loss of €401 million ($594 million) in the fiscal third quarter ended in June, with revenue down 48% from a year earlier, reports WSJ. The stock of the company has declined to less than $2 from more than $15 a share last year, and it now has a market cap of just $653 million. That has caused Infineon to write down the value of its Qimonda stake by €1.4 billion in the past two quarters.

Despite of especially tough times for Qimonda, the benefits of acquisitions are clear to Micron: it will be able to control roughly 20% of the DRAM market and will get technologies necessary to produce high-margin GDDR and XDR memory for graphics cards, video game consoles and other products.

Infineon, Micron and Qimonda did not comment on the news-story.

By: DocMemory
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