Saturday, November 29, 2014
Search
  
Submit your own News for
inclusion in our Site.
Click here...
Breaking News
Sony's New E-Paper FES Watch Appears Online
Amazon Releases Deals of the Year on Cyber Monday
Germany To Get Secure Phones By BlackBerry
Xbox And Playstation Black Friday Deals
Toshiba Launches ARM-Based Application Processors with Sound, Image Data-Mining and Security Functions
Pioneer To Release The BDR-XU03JM Portable Blu-ray Drive For Macs
Syrian Electronic Army targets CNBC, Telegraph, Independent, PCWorld
GoPro Camera Drones In The Works: report
Active Discussions
Hi All!
cdrw trouble
CDR for car Sat Nav
DVD/DL for Optiarc 7191S at 8X
Copied dvd's say blank in computer only
Made video, won't play back easily
New Features In Firefox 33
updated tests for dvd and cd burners
 Home > News > General Computing > Risks C...
Last 7 Days News : SU MO TU WE TH FR SA All News

Tuesday, July 24, 2012
Risks Come with Rewards in Micron's Purchase of Elpida


Micron?s recent purchase of bankrupt Japanese entity Elpida Memory is a bold move not without risk, even though Micron will emerge from the acquisition considerably larger with more than double its original manufacturing capacity for dynamic random access memory (DRAM), according to IHS iSuppli.

Micron's buyout of Elpida on July 2 is expected to boost the Idaho firm's DRAM production volume to approximately 370,000 wafer starts per month over the long term, up a notable 131 percent from 160,000 wafer starts prior to the purchase. The new-found capacity by the only U.S. memory manufacturer allows it to leapfrog perennial second-placed Hynix Semiconductor of South Korea, which now will become the third-ranked player in the global DRAM industry, with about 300,000 wafer starts per month.

Both Hynix and Micron will continue to trail DRAM market leader Samsung Electronics, which leads with 400,000 wafer starts per month. Based on first quarter rankings, the Micron acquisition will boost its standing to 24.8 percent share of the DRAM space, behind Samsung?s 40.8 percent portion but ahead of Hynix?s 24.2 percent share of market.

"Several key components make the Micron-Elpida deal appear to be a smart move, but integration could prove challenging or even messy if details are not worked out carefully enough," said Mike Howard, senior principal analyst for DRAM & memory at IHS. "Micron's previous acquisitions in years past of specialty memory makers Numonyx and Inotera presented unanticipated surprises, and in some ways Micron is still digesting those purchases. Adding Elpida to the mix is unlikely to hasten the rest of the complicated integration process that Micron still needs to do with its earlier buyouts."

Moreover, the transfer of technology entailed by the deal with Elpida - competitor on roughly the same scale - as Micron may prove costly and time consuming.

"All this means that while Micron has put a tremendous amount of work into the acquisition, the real work lies ahead, IHS believes," Howard added.

Among the intriguing facets of the Elpida deal are the purchase price of the transaction, the way payments will be made and how the payments will be funded.

In terms of the price, the total purchase cost of Elpida to Micron is $2.5 billion, of which $750.0 million is to be paid in cash. The cash portion of the payment is intended for Elpida assets and will be due at the close of the deal, expected sometime in 2013. The cash payment won?t necessarily reduce the cash balance of Micron, as it will gain access to all of Elpida?s cash and current assets on the bankrupt company?s balance sheet. Elpida at the end of December 2011 had approximately $1.4 billion in assets.

The other part of the purchase price is the remaining balance of $1.75 billion. This part of the payment, which does not start until December 2014 and will continue to 2019, is paid out in interest-free installments - a terrific boon to Micron, considering that interest payments could have easily approached 5 percent.

Lastly, of keen interest to DRAM market watchers and prognosticators is that the deal also calls for the payments to come from the free cash flow of a restructured Elpida, which will now turn into a Micron subsidiary. If Elpida is not cash-flow positive in its new role as Micron offspring, then no payments will have to be made by the parent company. By structuring the deal this way, Micron has insulated itself from any drastic downturns in the DRAM market or from being upended by larger macroeconomic events beyond its control.

In a separate but related deal, Micron also purchased Taiwanese maker Powerchip Semiconductor?s minority interest in Rexchip Electronics, in which Elpida had majority two-thirds share. The deal for $330 million gives Micron an overwhelming 89 percent ownership share of Rexchip, which has a cost competitive, leading-edge manufacturing plant in Taiwan. The Rexchip facility formed a very attractive component of the entire Elpida deal, and Micron?s concurrent purchase of both Elpida and Rexchip gives the U.S. memory maker an even stronger edge in the tightly held DRAM space.


Previous
Next
Apple Asks Samsung To Pay $2.5 billion On Damages        All News        New Pioneer Home Theater Comes With Wi-Fi Blu-ray 3D Player
Corning and Samsung To Build New LCD-glass Plant in China     General Computing News      AMD To Stick To Existing 28nm Foundry Source Despite Tight Supply

Get RSS feed Easy Print E-Mail this Message

Related News
Micron Introduces Embedded Multichip Package (MCP) Portfolio, Automotive Storage Solutions
Micron, Wave Systems, Lenovo and American Megatrends To Create New Standard to Tackle Pre-boot Threats Within the Supply Chain
Micron Urges Investors To Reject TRC Capital's Unsolicited Tender Offer
Micron Launches SDK For Its Automata Processor
Micron M600 SSD Released With Dynamic SLC Cache
Tessera and Micron Execute New Technology and Patent License Agreements
Micron Announces Monolithic 8Gb DDR3 SDRAM
Micron, SK Hynix May Invest In Taiwan SSD Controller Companies
Micron to Discuss Emerging Memories at 2014 Symposia on VLSI Technology and Circuits
Crucial Starts Sampling DDR4 Server Memory
Micron Releases New Solid State Drive For Data Centers
Micron, MediaTek Consider Investments In Kingston Solutions

Most Popular News
 
Home | News | All News | Reviews | Articles | Guides | Download | Expert Area | Forum | Site Info
Site best viewed at 1024x768+ - CDRINFO.COM 1998-2014 - All rights reserved -
Privacy policy - Contact Us .