Elpida Files for Bankruptcy: Biggest Japanese Manufacturing Corporate Failure since WWII
2/27/2012 by: Gil Russell
Elpida Memory Incorporated filed for bankruptcy protection today in the largest manufacturing corporate failure since WWII. The filing resulted from the company’s inability to refinance debts, which total US $5.5 billion [end of March 2012].
The last remaining DRAM producer in Japan [12.5% market share], Elpida is a further sign of worldwide consolidation amongst memory producers leaving Hynix and Samsung in Korea [21.5% and 45% market share] and Micron Technology [12.5% market share] in the U.S. as the last of the big players.
Yukio Sakamoto, Elpida CEO and President failed to save the company from bankrupcy
Elpida decided to separate the low margin PC business to its Taiwanese subsidiary and concentrate instead on higher ASP devices for smartphones after the financial crisis. Yukio Sakamoto, Elpida’s CEO and President, said "We never imagined the yen would become this strong," and is cited as the major cause of Elpida’s inability to compete at a price level with their competitors.
Elpida said that it plans to reemerge under the supervision of the Tokyo District Court and a team of lawyers. President Yukio Sakamoto will stay on to work on the rehabilitation process. The company will be delisted from the Tokyo Stock Exchange as of March 28.
As reported by BSN* Elpida was in talks with Micron Technology Inc. regarding a strategic alliance as a step toward securing support from their creditors. But Micron’s former Chief Executive, Steve Appleton, a strong advocate unexpectedly died in a small plane crash in early February. "We received offers from potential partners, buth they never materialized in a concrete form," Sakamoto said.
Elpida’s bankruptcy filing came as a surprise to many analysts. It was widely thought the Ministry of Trade and Industry would facilitate a rescue of the firm. MITI’s minister Yukio Edano would only say it was "regrettable, but inevitable" at a press conference Monday.
This is also an unsettling development for the remaining unprofitable DRAM producers in Taiwan. Elpida has a joint venture with Powerchip Semiconductor Corp. called Rexchip Electronics Corp.- troubled Nanya Technology and Windbond had market shares of just 3.6% and 1.6% respectively. The rumor that ProMOS is being acquired by GlobalFoundries (GlobalFoundries denied the rumors) has added further fuel to the consolidation fire that’s now proceeding apace.
There is little doubt that Micron, which has a history of opportunistically snapping up chip factories at attractive prices as others dropped from the market will somehow be involved…,
Then again, there is a possibility that Elpida could go the way of Japan Air Lines (JAL), which entered bankrupcy, reorganized the company, exited bankrupcy after 14 months and is now considered a turnaround company in the airline business.
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