Elpida to swallow Mitsubishi DRAM biz

Last big Japanese player

Elpida will be the last major Japanese DRAM maker, after buying Mitsubishi Electric's DRAM business.

First, it's taking over the sales operation and then - no date fixed yet, but it has to be before March, when the purchase is to complete - it's taking on the Mitsubishi products, intellectual property concerning manufacturing techniques, and technical and customer support.

"This transition makes good business sense considering current market conditions," said Dr. Koichi Nagasawa, exective vice president of Mitsubishi Electric. It wants to conduct an orderly withdrawla from the DRAM market and says it will work closely with Elpida to ensure a smooth hand-over.

Elpida is the product of a merger, between Hitachi and NEC's DRAM businesses. With Mitsubishi Electric under its belt, it could gain another 2.6 per cent global market share to sit alongside its 8.5 per cent share (Dataquest figures) This would leapfrog it over Infineon to take fourth place in the DRAM producer league table, behind Samsung, Micron and Hynix.

Consolidation has seen many Japanese firms flee the DRAM business - Toshiba sold up to Micron earlier this year, for instance.

Elpida looks like its here to stay, with a new wholly-owned 300mm wafer DRAM fab coming on stream in January 2003. At the same its laying off some risk by appointing Powerchip, of Taiwan, as its foundry partner. The deal, announced today, will see Elpida transfer 0.11 micron DRAM process technology to Powerchip. But initially, Powerchip "will continue to use the 0.13/0.12 micron process technology provided by Mitsubishi Electric as part of the integration agreement".

Further industry consolidation may ease pressure on prices, but not yet: Mitsubishi's DRAM business is too small to make much difference.

If some equilibrium between DRAM supply and demand and industry-wide profits are to be achieved, then the future of Hynix, the ailing but big South Korean DRAM maker, needs to be resolved, one way or another, and PC sales need to pick up. ®

Elpida press release