Only 8 of the world's 8 largest memory chip makers are profitable

Bloomberg issued a document saying that due to the downturn of the PC market and other factors, the memory chip manufacturing industry is in a difficult situation. Only eight of the world's top eight manufacturers are profitable. Some smaller manufacturers choose to switch to or seek mergers and acquisitions, and analysts believe that the industry may eventually be merged into several large manufacturers. Hands. The original text is as follows: The heavy burden caused by falling debts, losses, and prices has caused increasing pressure on memory chip makers ProMOS Technologies Inc., Powerchip Technology Corp., and Elpida Memory Inc. , Or will seek to merge or withdraw from the industry.

Mike Howard, analyst at iSuppli, a US market research and analysis company, points out that Taiwan ProMOS Technologies, which has suffered losses for 16 consecutive quarters, and Japan Elpida, which is debt-ridden by 4.61 billion U.S. dollars, have produced chips at prices below cost; Powerchip Technology has no profit or sales revenue for three quarters.

The global personal computer (PC) memory chip market reached US$39 billion, and the memory chip manufacturers are gloomy in their efforts to meet the market demand. It takes many years for the memory chip factories to go from construction to production, and it is not easy to shut down. Over the past year, the price of dynamic random access memory (DRAM) has fallen by 26% year-on-year due to consumer neglect. Makoto Kikuch, CEO of Tokyo-based Myojo Asset Management Co., pointed out that some companies may not be able to sustain themselves. He said: "In order to survive, corporate mergers will be inevitable. The industry's deficit level is out of control."

Data from Bloomberg shows that the overall market value of DRAM chip makers has dropped by 19% this year. At the same time, the Philadelphia Semiconductor Index, which tracks the overall performance of the chip industry, fell 13%, while the Nasdaq Composite Index lost 2.9%.

Steve Appleton, CEO of Micron Technology Inc., said in a conference last week that fewer large-scale chip makers can judge market demand better than many suppliers. , and adjust the production capacity according to the fluctuation of the buyer.

"The situation is very serious"

Among the world's eight largest DRAM chip manufacturers, only Micron Technology, Samsung Electronics and Hynix Semiconductor Inc. are currently profitable. In contrast, Elpida, ProMOS, Powerchip, and Nanya Technology Corp. are harder to bear the upfront investment of billions of dollars in new factories and new machines. If you do not upgrade your equipment, production costs will become higher.

By the market research company Gartner as the world's sixth-largest and seventh-largest DRAM makers, Powerchip and ProMOS have reduced their dependence on the PC market. However, they are still the most vulnerable. Sanford C. Bernstein & Co. Mark Newman, an analyst, said: "I think it is very difficult for them to survive this period of downturn. The current situation they face is very serious."

The cost of building a DRAM factory often exceeds 4 billion U.S. dollars, and it will fall behind in less than 5 years. The cost of shutting down and reopening a factory is so high that manufacturers let the factory operate 24 hours a day, regardless of market conditions.

The ups and downs According to a survey conducted by Micron Technology, the output of DRAM chips soared by 87% in 2007 and another 63% in the next year. Then the economic recession suppressed the market demand for electronic products and the price of DRAMs also drastically dipped. Last year, production growth slowed to 45%, and this year it may be 48%, although the PC market remains sluggish.

Previous mergers and acquisitions have made memory chip manufacturers reduce. Elpida in Japan was formed in 1999 by the merger of NEC and Hitachi’s memory business.

Micron attempted to acquire Hynix in 2002, but it expanded in other ways. It acquired the shares of Inotera Memories Inc. in 2008 and became a joint venture partner of South Asia Technology. In 1998, Micron acquired the memory business unit of Texas Instruments, the pioneer in the industry, and entered the DRAM industry.

However, mergers and acquisitions may not necessarily make the company's future brighter. For example, when Hynix bought LG Semiconductor in 1999, it not only paid back debt, but also fell into the position of being forced to seek financial assistance.

"Poor people together"

"If the traditional merger means the integration of several companies, the difficulty now is that the financial status of each company is very severe." said Eric Tang, a spokesperson for Hsinchu Powerchip Technology in Taiwan. "Two or three poor people are Together, it will not become rich. You must find your way out."

According to Gartner, Samsung Electronics, which holds a 38% share of the global memory chip market, has cash holdings of US$9.15 billion. However, the electronics manufacturer headquartered in Suwon, South Korea, is committed to internal growth. Young Park, an analyst at Woori Investment & Securities, points out that Samsung may be able to avoid being acquired because it has the ability to build factories more efficiently.

Appleton said last week that although the DRAM industry "will take place one or two mergers and acquisitions," there are already few good opportunities for cheaply buying assets and significantly increasing the company's size. Micron spokesman Dan Francisco declined to give details.

James Kim, a spokesperson for South Korea's Hynix, the world's second-largest DRAM maker, said Hynix has no plans to acquire other DRAM companies.

Jump out of the PC

He said: "No matter how the industry's internal merger, we will continue to focus on interpreting future product trends to gain a leading position in technology."

Samsung spokesman James Chung declined to comment.

In response to the harsh conditions, some smaller chip vendors have sought to diversify their development, move beyond DRAM, and find other ways to reduce their expenses.

A spokesman for Powerchip, Tan Zhongmin, said that the company plans to cut PC memory chips and switch to other semiconductor products.

Ben Tseng, a spokesperson for ProMOS Taiwan, said that the company is requesting creditors to convert their debts and then looking for new investors to fund the company.

According to Kikuchi of Myojo Asset Management Co., it is unlikely that the $160 million loan from the government, banks and Taiwanese partners in 2009 to maintain its operational Elpida will be revisited by the failed plan to acquire Taiwanese chip makers.

Elpida Limited The Japanese government wants to maintain the local supply of memory chips. This may mean that Elpida cannot be sold to overseas companies. However, Sanford C. Bernstein's Newman pointed out that Toshiba may be interested in Toshiba's memory on mobile devices such as Apple's iPad and iPhone.

Both Toshiba spokesman and Elpida representatives declined to comment. Both companies are headquartered in Tokyo.

Taiwan’s South Asia Technology has only been profitable for a quarter since mid-2007, company spokesman Pai Pei-lin said. South Asia has no plans to acquire competitors. He also said that South Asia is working to reduce costs and increase prices.

iSuppli's Howard said that DRAM suppliers may still need to reduce to about three. He also said: "Even if the merger, the situation in this industry is still very bad, because production will not stop ... If there are only three remaining industries, more sensible are expected to win.

Kim Chang Yeul, an analyst at Mirae Asset Securities in South Korea, pointed out that some companies may be forced to go out of business. "Now who do not want to buy these lost chip manufacturers, the problem is just who will exit the memory chip market," Kim said, "Who will jump into this market?"