July 4, 2012- The computer memory chip industry was given a boost when Micron Technology Inc purchased Elpida Memory Inc. A consolidation of the chip industry will help to ease the problem of oversupply that has plagued the market for a number of years.
Micron will streamline its former Japanese rival and that will help the entire industry to create a smaller supply of chips that will help lead to higher prices of DRAM – dynamic random access memory chips, said analysts
Over the long term, as more consolidation takes place, a normal supply behavior will exist and help to create more stable and higher profits for those who survive, said a computer analyst.
Micron, with the acquisition of Elpida, overtakes SK Hynix from South Korea as the second largest maker in the world of DRAMs by revenue. Samsung Electronics remains the largest supplier of DRAMs, which are widely used in mobile devices and personal computers.
There are a number of smaller Taiwanese chipmakers, but analysts expect the market for DRAM to become dominated by Samsung, Hynix and Micron. The deal by Micron to purchase Elpida is expected to be completed within the first six months of 2013. Elpida is the only DRAM maker in Japan and filed for bankruptcy in February after having problems repaying large debts amid the price drops in chips.