Nobunaga Chai, DIGITIMES Research, Taipei [Monday 5 March 2012]
The short-term impact of Elpida Memory's bankruptcy on Taiwan-based DRAM chipmakers might be mixed. However, none of the Taiwan companies, which are second-tier suppliers in the global DRAM market, will benefit in the long run if Elpida fails to exit from bankruptcy protection.
Nanya Technology, Inotera Memories and Winbond Electronics are anticipated to enjoy some positive effects immediatedly after Elpida's bankruptcy, such as, gaining new orders released by clients of the Japan-based rival and generating more revenues thanks to rising chip prices on a fewer number of suppliers. Nonetheless, Digitimes Rsearch believes, the companies will be facing more pressure from Samsung Electronics, which is expected to benefit from Elpida's exit and expand further its market leadership.
Elpida's bankruptcy, however, will have some immediate negative effects on its production subsidiary Rexchip Electronics and Powerchip Technology, a partner that uses its process technology to produce chips. Elpida's failure to exit bankruptcy could mean an upcoming change in the ownership of Rexchip. Meanwhile, Powerchip will lose its technology source for next-generation production processes with competitiveness seen lagging in the long term.
In addition, Powertech Technology (PTI) and Walton Advanced Engineering, Elpida's major backend service providers, will be hit in the short term by uncollected accounts receivable at Elpida. In the long term, the pair will confront declining market share due to the loss of a major client.
Digitimes Research offers some possible scenarios for the development of Elpida's bankruptcy filing.
Elpida's success in raising funds and restructuring its business is definitely the best-case scenario. The vendor will be able to remain as one of the global major DRAM companies and will be on track to transition to 20nm process technology.
Another scenario is that Elpida agrees to sell its Hiroshima, Japan plant to Globalfoundries for new capital, and transfer all of its production to subsidiary Rexchip - a move to scale down its operation. Elpida could also end up partnering with Toshiba and create a new company dedicated to developing and making next-generation memory devices, such as multi-chip packages.
In the worst-case scenario, Elpida has to go bankrupt, selling its fabs and stake in Rexchip. This will deliver a significant impact on the worldwide DRAM supply and market landscape, Digitimes Research believes.
Source: Digitimes Research, compiled by Digitimes, March 2012