Micron To Acquire Elpida For $2.5 Billion

by Ryan Smith on 7/3/2012 2:00:00 AM
Posted in Memory , Micron

And then there were 5.

For the better part of a year now the DRAM industry has been in a lurch due to low prices. As a result of soft demand exacerbated by the hard drive shortage and a corresponding glut in supply, DRAM prices have become severely depressed, to the point where even 16GB of PC DRAM can regularly be found for under $90 and 8GB of RAM for as little as $40. And though Moore’s Law puts constant downward pressure on DRAM prices, on a historical basis healthy DRAM pricing shouldn’t drop this quickly this fast.

Because of this extremely weak pricing all of the major players in the DRAM industry have been struggling to stay afloat – just breaking even is a big deal – which has led to a series of cutbacks and delays in future build outs. However even that hasn’t been quite enough, and as we’ve seen time and time again in during major slumps in commodity technology industry, the rising tide of red ink has come to claim another.

The victim this time is Elpida, one of the smaller DRAM manufacturers. After filing for bankruptcy earlier this year the company has finally accepted a buy-out offer from Micron, who has been looking to take advantage of this slump to purchase more capacity and increase their competitiveness with the other major players in the DRAM market. As a result of the deal Micron will pay Elpida shareholders a total of nearly 2.5 billion dollars, paid out as $750M upfront and then annual installments through 2019. In turn Micron will acquire Elpida and its assets, allowing the company to expand their DRAM production by nearly 50% for a fraction of the price of building new facilities of their own.

This acquisition is primarily about jockeying for position among the remaining DRAM manufacturers – Samsung, Micron, Hynix, Winbond, and Nanya – ahead of a cyclical recovery in the highly volatile DRAM market. The acquisition will boost Micron to the 2nd largest DRAM manufacturer (between Samsung and Hynix), while putting Winbond and Nanya in competition for 4th and 5th place. At the same time Elpida has a strong presence in the mobile DRAM market with memory types such as LPDDR2 and DDR3L, which in turn will give Micron a much stronger position in those markets as opposed to the more cutthroat PC DRAM market.

Ultimately major slumps in the DRAM market are usually followed by major booms, and this should be no different. A typical recovery pattern means that once demand recovers the current lack of investment in new facilities will bottleneck supply, which is where these acquisitions typically pay for themselves. At the same time five players is still a larger number than what we see in most other commodity component industries (e.g. hard drives), so there’s no guarantee that the next slump won’t also consume a DRAM manufacturer.

Source: Associated Press

Update: In our attempt to count the remaining DRAM manufacturers we forgot about Nanya. Sorry about that, guys.

Print This Article 6 Comments View All Comments Post a Comment winbond? by menting on Tuesday, July 03, 2012 Why is Winbond even considered?
I thought Winbond moved away from the traditional DRAM business, and even if they didn't, Nanya is still way bigger than they are. menting Reply RE: winbond? by menting on Tuesday, July 03, 2012 The only thing that Winbond is of any significance is in the mobile DRAM. menting Reply RE: winbond? by Ryan Smith on Tuesday, July 03, 2012 Winbond still produces traditional DRAM (up to DDR3-1866), though I don't know in what volume. However to be frank when we were compiling a list of the remaining DRAM manufacturers we completely forgot about Nanya. That will be corrected. Ryan Smith Reply RE: winbond? by Spatty on Tuesday, July 03, 2012 Winbond makes specialty DRAM only. And ya missed quite a few DRAM companies. But the chips you'll be able to buy on Newegg will only have 4 designs behind them from either Samsung/ Hynix, Elpida or Micron. Nayna is making ships based on R&D with Micron.
http://www.isuppli.com/memory-and-storage/marketwa...$8-3-billion.aspx Spatty Reply Nanya Rocks by bwave on Tuesday, July 03, 2012 You know who my favorite DRAM maker is? Nanya

Wanna know why? NANYA BIDNESS! bwave Reply "this quickly this fast" by Visual on Wednesday, July 04, 2012 Did you perhaps mean "this speedily this velocitously"? Visual Reply Subject Comment Post Comment Please login or register to post a comment.
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Hynix to Acquire Link A Media Devices (LAMD)

by Kristian Vättö on 6/19/2012 9:25:00 PM
Posted in Storage , SSDs , Hynix , LAMD

Hynix published a press release that they have acquired Link A Media Devices (commonly referred to as simply LAMD). The cost of the acquisition has not been revealed, nor did Hynix state when the acquisition should be complete. LAMD will be joining Hynix as a NAND focused business unit, but right now there is no confirmation whether the LAMD name will stay.

Update: Hynix acquired LAMD for $248 million.

LAMD was actually founded over eight years ago, but it has not received much publicity until earlier this month when Corsair announced their Neutron SSD series, which is the first consumer SSD to be based on a LAMD controller. LAMD has been more concentrated on the enterprise storage market in the past. 

Supposedly, the LM87800 controller used in Corsair's Neutron SSD series is exclusive to Corsair for the near future, although no specific time frame was announced. The acquisition should not have an impact on Corsair's exclusivity since it was disclosed before the acquisition, but I'm sure Corsair is not very happy about this. Corsair is one of the many SSD OEMs that mainly buy everything from other companies and just build the SSD. That limits differentiation and the LAMD exclusivity would have been a great benefit for them, but now it looks like it will be a very short run. 

Hynix is actually not a new player in the SSD market but their SSDs have never gained much popularity. (To be honest, I didn't know they made SSDs until I started googling.) In fact, Hynix' SandForce based SH910 lineup was revealed only a couple of days ago. 

As a whole, the deal makes perfect sense. Hynix is pretty much the only NAND manufacturer that has not had a breakthrough in the SSD market. Intel, Samsung, Micron/Crucial, Toshiba, and SanDisk are all fairly big names in the market. However, there is one thing common with all of them: they all make their own firmware. Intel gave up on in-house controllers (for the time being), but all their SSDs still ship with Intel's own custom firmware. Micron/Crucial is using Marvell's controllers with custom firmware in their consumer products, but they also have an in-house enterprise controller. Toshiba has made their own controllers in the past but their SATA 6Gb/s SSDs are a mystery for now; they might be a SandForce rebrand but I would at least expect custom firmware. SanDisk acquired a controller firm called Pliant in 2011, although they use third party controllers as well. And finally, Samsung is even more in control of their SSDs as they make everything from DRAM to firmware on their own. 

It's quite obvious that Hynix needed something that would make them unique. SandForce is now part of LSI, which is way too big for Hynix to acquire (considering they haven't made any profit in the last two years). Marvell falls in the same category. While the price of the acquisition was not revealed, LAMD was likely nowhere near as expensive as LSI or Marvell would have been, which is why it was a logical choice for Hynix.

Another option would have been hiring a firmware team and developing a custom firmware for a third party controller like Intel and Micron are doing. The downside is that they would not have the freedom to do whatever they want - they might be limited by the controller's design for example. Having your own controller is liberating because you have the ability to design it from a scratch. You can concentrate on the areas you find important and not be bottlenecked by a third party controller. 

All in all, this is a very interesting and welcome acquisition. Now Hynix has all they need: NAND, DRAM, controller and firmware. As we have seen with Intel, Samsung, and other SSD giants, that is an extremely powerful combination. Judging by the performance figures of Corsair's Neutron series, LAMD's LM87800 controller is fast. Combine a high performance controller with your own NAND and you've got a competitive SSD. Reliability is of course a question mark at this point but usually when you build the SSD from beginning to end, reliablity is higher because you have total control over every single part. It's not a coincidence that Intel, Samsung, Toshiba and Micron/Crucial SSDs are regarded as the most reliable SSDs.

We are eagerly waiting for our Corsair Neutron review sample to see how the LAMD controller performs. Once we have tested it, we might know more about the motives behind Hynix's decision to acquire LAMD. Either way, it looks like the SSD market just got one more powerful competitor.

 

Source: Hynix Press Release

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