Elpida Bankruptcy Projected To Boost Rest Of DRAM Market

The move may signify the fall of Japan’s last-standing manufacturer of DRAM – a memory chip found in traditional desktop and notebook PCs – but according to a report Friday from market analysts IHS iSuppli, Elpida’s bankruptcy may ultimately provide a much-needed boost to the rest of the DRAM market.

IHS forecasted that Elpida’s retreat from the market will reduce DRAM supplies which, in turn, will boost both DRAM prices and vendors’ revenue through the second half of the year. If more than 25 percent of Elpida’s manufacturing capacity is cut, IHS said the global average selling price for all DRAM products will jump from $1.05 to $1.21 by the end of 2012.

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"A meaningful reduction in Elpida’s manufacturing will cause the DRAM market to go into a state of undersupply, causing prices to increase," said Mike Howard, senior principal analyst for DRAM & memory at IHS, in the report. "Shipments likely will decrease because of the Elpida bankruptcy, even though the resulting increase in revenue—driven by higher prices—will cause the market to perform better than expected in 2012."

Howard said that the exact degree to which Elpida’s bankruptcy will impact DRAM pricing and revenue remains unseen, but will become more definitive once the manufacturer discloses its plans for its manufacturing assets. But either way, he said, Elpida’s bankruptcy means the remaining DRAM vendors "can look forward to a much rosier 2012 than they did just one week ago."

IHS noted that Elpida’s bankruptcy filing doesn’t necessarily mean the company is putting a halt on its manufacturing efforts just yet. Production has not stopped at its manufacturing facilities, IHS said, and its engineers, salespeople and corporate strategists are "hard at work finding a path forward."

There is, however, a chance that Elpida will be forced to exit the market altogether. While this is unlikely, IHS said it expects Elpida customers to start preparing over the next few months by seeking out alternative sources of the popular memory technology.

Samsung, Hynix, Micron, and Nanya will most likely top their lists, the report said.