IHS: Micron to gain in dram share after Elpida acquistion

According to IHS iSuppli, Micron had been ranked the number four global dram supplier in the first quarter, with $759million in revenue and a 12.2% share of the market. The company placed behind top ranked Samsung Electronics, number two ranked Hynix Semiconductor and number three ranked Elpida. With the purchase of Elpida, however, Micron's revenue and market share in the first quarter is expected to jump to $1.5billion and 24.8%. This would allow it to edge out Hynix for the number two spot. "The purchase of Elpida represents a huge boost for Micron's status in the dram industry," said Mike Howard, senior principal analyst at IHS. "Micron will see its market share and dram manufacturing base nearly double as a result. Furthermore, Micron is gaining access to some excellent mobile dram technology, which should greatly improve its product portfolio. The $2.5bn sale price is reasonable and shouldn't impact Micron's cash position adversely. It will likely take at least six months for the deal to close, but IHS expects a very quick transition and integration once it does." Micron's acquisition announcement follows news of the bankruptcy of Elpida. The consolidation of the dram market set off by Elpida's bankruptcy and the subsequent purchase by Micron is expected to bring new stability to dram pricing, helping lead renewed growth to the market. Global dram industry revenue this year is forecast to reach $30.5bn, up 3.3% from $29.6bn in 2011. Although seemingly small, the revenue expansion for 2012 has been described as a welcome development given the market's 25% contraction last year. The overall picture is expected to brighten during the next few years, with dram revenue exceeding $30bn each year for the next five years and reaching $39bn in 2016.