Japanese memory maker Elpida has filed for bankruptcy protection, citing debts of some ¥448 billion (about $5.55 billion), making it the biggest bankruptcy filing in Japanese history. Elpida is Japan’s last remaining manufacturer of DRAM, the memory that fuels everything from servers to desktop and notebook computers to smartphones and mobile devices. However, the company has struggled as the price of DRAM has steadily dropped to due competition from the likes of South Korea’s Samsung and Hynix, and the strong Japanese yen has both kept Elpida’s prices high and increased the cost of Elpida’s operations across the board. Although Elpida is still making RAM for the time being, the filing raises concerns that Japan may soon find itself out of the DRAM business it once dominated.
Another factor in Elpida’s woes: products like smartphones and tablets use far less DRAM than their notebook and netbook counterparts — while their reliance on flash storage feeds the coffers of both Hynix and Samsung.
Elpida was founded a decade ago as Japan’s DRAM manufacturers consolidated their operations in an effort to better compete with overseas firms, and was still the number-three memory maker worldwide in the third quarter of 2011, according to iSuppli. Some recent speculation has focused on the possibility of a merger between Elpida and Micron: the combined company would in theory be the number-two memory manufacturer worldwide, trailing Samsung, but knocking Hynix down to third place. However, any talks between the two companies may have been disrupted by the death of Micron founder Steve Appleton in a plane crash earlier this month.
Elpida says it expects to reach a deal with its lenders on its turnaround plan; however, the company will likely have to reduce its overall operations and possibly sell off portions of its business, which will likely turn some customers towards Samsung and Hynix.