Will merger improve the dram market?
1 min read
The dram market is a volatile place where only the brave and the foolish venture. While the need to minimise the cost per bit forces dram manufacturers to use the latest processes, varying demand and strong competition has seen prices collapse and devices selling for less than they cost to make. And, over the years, various competition authorities have looked at the market with interest.
Even so, at some point in the past, all leading semiconductor companies have had dram operations, but few remain engaged in the market. Some, such as NEC, saw the writing on the wall and exited gracefully by selling their interests to more enthusiastic companies. Others, like Infineon's Qimonda subsidiary, soldiered on, only to fail.
Despite the culls, the dram market remains extremely competitive. While revenues have recently started increasing, this follows a sustained period of steep price decline.
It's a business tough enough that even Elpida, the fourth largest dram company, appears to be in near terminal financial difficulties and may be a takeover target. Rumour has it that Micron and Elpida will join forces, creating a company large enough to challenge Samsung, which currently holds more than 50% of the market and is believed to be the only profitable dram maker.
If the merger does happen, two companies with substantially different cultures will have to come together. That's a tall order at the best of times and there are many examples of where companies have tried and failed.
However, there is a complicating factor. The electronics industry often – some would say mostly – appears to defy the logic of economics and there's no guarantee that creating what will be the second largest dram company will bring the benefits the architects of the move intend.
