New gossip suggests dynamic random access memory (DRAM) companies Micron and Elpida may soon join forces as the latter's recent market failings place a Japanese government bail-out on the table. A merger would rearrange the present DRAM industry and place the new company mere points away from market leader Samsung, an analyst said.
The Micro-Elpida merger would grab 28 percent of the shrinking DRAM industry and land it just five points away from Samsung, said Mike Howard, IHS Senior Principal Analyst. Current second place mainstay, South Korea's Hynix, would drop to third place with a 23 percent market share. Taiwanese company Nanya would retain its current fifth place spot.
"Overall, a Micron/Elpida merger would present Samsung with its most powerful rival yet," said Howard. "Samsung is usually 10 percentage points ahead of its next competitor, but the merger would trim it's formidable market share lead by half."
The analyst was less optimistic about how Micro and Elpida customers would fare, calling the possible merger "a blessing and a curse" for DRAM buyers.
"A merger would result in one less supplier for the market, which could have the effect of allowing the other remaining players in the DRAM space to enjoy even more leverage over their customers," Howard said. "But a merger could also prove to be crucially needed ballast against the overwhelming size and influence of Samsung, acting as a foil to the South Korean's relentless advance in DRAM."
Howard added that the two competitors still face considerable obstacles on the road to merging, including Elpida's $4 billion debt and the freakish death of Micron CEO Steve Appleton. According to the researcher, Appleton had pushed for the merger prior to being killed in a plane crash earlier this month.
Prior business deals between Micron and Nanya could also put the kibosh on a merger, Howard speculated.
