Wednesday, April 11, 2012
For Micron, it’s an opportunity to obtain wafer capacity on the cheap as well as strengthen its mobile DRAM business where it is relatively weak. Toshiba, which exited the DRAM business in 2001, is not particularly interested to returning to the commodity business. Its primary focus is in the mobile DRAM, which it can package together with NAND in an MCP as a total solution for mobile applications.
The reasons for SK Hynix’s interest are less clear. An Elpida acquisition would help it close the gap against Samsung in DRAM, however, its participation in the bidding may be just a way to raise the price any successful bidder will have to pay.
As this is a business where scale and heavy capex investments are required, it would be difficult for private equity firms TPG and Hony to extract any financial value. Hony is affiliated with Lenovo to which Elpida is a major DRAM supplier. Its primary interest would be to ensure continuity of supply.
Ultimately, a Micron acquisition, potentially with participation of the Formosa Plastics Group or a joint SK Hynix-Toshiba acquisition would be the most likely outcomes.
Either outcome would be positive for the DRAM market as the acquirer would have to transition production facilities to a common technology platform effectively constraining output for nine to 12 months.
By: DocMemory
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