Elpida Memory is to begin talks in January with rival DRAM maker Nanya Technology on a possible merger as the companies struggle to cope with falling prices and tough competition.
The Japanese and Taiwanese chipmakers have been losing substantial market share to larger rivals like Samsung, which now rules 45 percent of the market, making it difficult for the smaller companies to survive, particularly with DDR3 DRAM prices dropping from $1.50 in July to just $0.90 in October.

A report in the Nikkei Business Daily suggested that the two companies would begin merger talks next month in a bid to restore profitability and curb their shrinking market share. Elpida denied it had made any formal announcement in this regard, however, and said it was considering multiple options, including refinancing debt and requiring advance payment for product orders.

Elpida is in third place in the DRAM market with a 12.1 percent market share, behind Hynix' 21.5 percent, while Nanya is in fifth place with just 3.6 percent. Elpida saw a revenue decline of 29.8 percent in the third quarter, while Nanya experienced an even larger revenue drop of 36.7 percent.

However, the possibility of a merger could be held up by legal battles between the two companies over the alleged infringement of patents, not to mention a partnership between Nanya and Micron, another rival to Elpida.

Source: Reuters


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