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Tue May 8, 2012
Micron’s Bid To Stay Competitive In Memory Chips
The Reuters news agency reported earlier this week Micron Technology bid $2.5 billion to negotiate exclusively for a bankrupt Japanese company. One semiconductor analyst thinks the benefits of a potential deal outweigh the costs.
An unnamed source told Reuters that Micron is the last company standing to buy Elpida Memory. Mike Howard is a Boise-based semiconductor analyst with market research firm IHS iSuppli. He says there are several good reasons Micron would shell out billions to buy the Japanese company. "It’s going to be a difficult step to purchase and integrate Elpida, but it’s a necessary step."
Howard says bigger is better in the semiconductor industry. It’s expensive to fund research and development, and to manufacture chips so bigger companies benefit from economies of scale. A Micron/Elpida union would make the company second only to Samsung in the PC memory market. Elpida also makes chips used in the growing smartphone and tablet PC markets. Howard says, "Up until this point, Micron has been challenged in this segment. Their product has not been as good as the competition."
Howard predicts the deal will close before the end of spring after Micron takes a thorough look at Elpida’s books.
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