DRAM industry rallies after Elpida bankruptcy

Singapore’s chip makers are ready for the fall out that will be caused by Elpida’s bankruptcy, while over in South Korea Hynix is already seeing the benefits

In a bid to keep the chip industry afloat, Ulf Schneider, president of the Singapore Semiconductor Industry Association (SSIA), said that companies were preparing to drop their prices. 

He added that the industry was prepared for this as it had a “certain upgrade of productivity and technology to support” the price drops as well as innovation that would keep the sector “viable”.

Elpida announced its bankruptcy late last month blaming an all time low in its main product prices. The company folded after admitting it owed $5.5 billion and was unable to claw in its debt repayments for April. 

The move has just four companies now producing DRAM for global demand in Singapore. However, over in South Korea, Hynix isn’t complaining, claiming that it has seen a “marked growth” in the number of clients asking to secure big DRAM orders. 

 “Uncertainty over [Elpida’s] future creates a positive business outlook for us,” Hynix Chief Executive Kwon Oh-chul told Reuters.

Singapore based companies are also trying to make the best of the situation. Avi-tech, a company that sells products and services to the chip industry, told  Channel News Asia that most memory makers have excess capacity, a problem made worse by the huge demand for tablets and smartphones. The company said that it would now expect more consolidation within the chip manufacturing sector. Especially those who had no R&D.

The SSIA said it was confident that the industry will rally against South Korean bigwigs like Samsung and Hynix, with Toshiba and Micron set to help stave off the competition. 

Clearly in the lead with DRAM is Samsung Semi, earlier this month telling Techeye it had no plans to jump into the grave of Elpida, recently departed. Gerd Schauss, director, marketing intelligence told Techeye that Samsung was not interested in becoming a major shareholder, and that Samsung Semi would grow “organically” rather than off the back of the bankruptcy.