Elpida’s potential Bankruptcy threatens entire DRAM market

If the DRAM company Elpida is unable to repay staggering loans to the tune of $1.5 billion then its insolvency could send significant shock waves through the DRAM market. The company’s loans are short term with private lenders and the Japanese government. Elpida is currently seeking alliance and salvation with other DRAM companies in an effort to save its own skin, talks of agreements with Micron and Toshiba have been rumoured so far.

The reason for Elpida’s demise is not fully known, they are keeping well ahead of current DRAM pace having planned the move from the 30nm to 25nm DRAM process in Q2 of this year. They account for 12% of the DRAM commodity market and 17% of the mobile DRAM market.

The wider implications for the PC industry if Elpida were to go bankrupt are simple. Less competition in the DRAM market leading to a more Oligopolistic market structure whereby innovating developers like Samsung, Hynix and Micron will be able to dominate and push prices up.

Source: X-Bit Labs