Bankrupt Elpida leapfrogs likely acquirer Micron in Q1 DRAM rankings

May 24, 2012 — Micron Technology Inc. (MU) is the generally favored acquirer for Elpida Memory Inc., which went into bankruptcy proceedings in February. But this did not stop Elpida from displacing MU in the Q1 dynamic random access memory (DRAM) chip supplier rankings in Q1, outperforming other top DRAM suppliers and the overall sector of the memory industry, said IHS.

Table. Worldwide DRAM Market Share Ranking in Q1 2012 (Percentage Share Based on Millions of US Dollars in Revenue). SOURCE: IHS iSuppli Research, May 2012.

Rank Company Q1 ’12 Revenue Q1 ’12 Share Q4 ’11 Revenue Q4 ’11 Share Sequential Growth
1 Samsung 2,533 40.8% 2,805 43.2% -9.7%
2 Hynix 1,501 24.2% 1,538 23.7% -2.4%
3 Elpida 780 12.6% 773 11.9% 0.9%
4 Micron 759 12.2% 786 12.1% -3.4%
5 Nanya 282 4.5% 227 3.5% 24.2%
6 Winbond 96 1.5% 94 1.4% 2.1%
  Others 258 4.2% 273 4.2% -5.5%
  Total 6,209 100.0% 6,496 100.0% -4.4%

Elpida rose to 12.6% market share with close to 1% revenue increase over the previous quarter, shows an IHS iSuppli DRAM Market Brief report, outperforming the overall DRAM market, which declined 4.4% in Q1 to $6.2 billion. The global DRAM industry is expected to get a boost from Elpida’s bankruptcy in 2012, reaching $30.6 billion, or +3.3%, for the year, with another significant leap to nearly $40 billion in 2013.

However, in Q1, Micron’s sales fell 3% and its market share hit 12.2%, allowing Elpida to take over its #3 spot. Micron had gained #3 in 2011, after 20 straight quarters at #4. The situation is “paradoxical,” noted Mike Howard, senior principal analyst for DRAM & memory research at IHS, since Micron has won the right to bid exclusively to buy Elpida’s assets, which include fabs in Japan. Howard points out that Micron would gain market share in DRAM with the buy, and had the requisite cash to purchase the company. Micron now must negotiate with Elpida on retiring or restructuring Elpida’s massive liabilities, and decide how to use Elpida’s large wafer fab in Hiroshima, Japan. Howard points out that the strength of the yen is making manufacturing in Japan uncompetitive.

Micron saw a 16% decline in average selling prices (ASPs) in Q1, stunting any growth from its 15% gain in unit shipments.

Samsung Electronics Co. Ltd. and Hynix Semiconductor Inc. remained the top 2 DRAM manufacturers in the first quarter. Samsung holds more than 3x the market share of Micron and Elpida; Hynix is at roughly 2x.

Samsung’s market share slipped from 43.2% in Q4 to 40.8%, on sales of $2.5 billion. Samsung may be biding its time to ramp up shipment growth until the end of the year, when DRAM prices are anticipated to be higher, IHS predicts.

Hynix hit its highest market share ever in Q1 2012, at 24.2% on sales of $1.5 billion.

Nanya Technology Corp. took the #5 spot, with production ramping up from a slowdown at the end of 2011. This brought about a 24.2% revenue increase sequentially, and gave Nanya 4.5% of the DRAM market. Winbond Electronics Corp. also saw sales growth in Q1, and held 1.5% market share.

Access the IHS iSuppli DRAM Market Brief report. IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. For more information, visit www.ihs.com.

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