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Issue N° 575 - August 1, 2014

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PC DRAM prices forecast to rise on likely Rexchip acquisition

Taipei, March 23 (CNA) Rexchip Electronics Corp., a Taiwan-based memory chip manufacturing arm of Japan’s Elpida Memory Inc., will remain as the greatest variable affecting the future DRAM market, market advisory firm TrendForce said Thursday.

Rexchip, a joint venture founded in 2006 by financially troubled Elpida and Taiwan’s Powerchip Technology Corp. to produce PC DRAM (dynamic random access memory) chips, is faced with the obligation of repaying some NT$15.3 billion (US$517 million) in debts by the end of this year.

TrendForce expects that DRAM manufacturers in South Korea, the United States and Taiwan will be potential candidates for a Rexchip merger or acquisition.

“Rexchip is undoubtedly the greatest variable affecting future DRAM capacity,” the Taipei-based research firm said in a report.

“If Rexchip changes hands, it will take a minimum of six months to advance Elpida’s current technology to match that of Rexchip’s new parent company,” it added. “Capacity utilization rate would decrease and yield rate would require an adjustment period as well.”

TrendForce estimates the total yearly capacity of PC DRAMs would see a decrease of 225,000 units if the sale occurred, which would significantly reduce DRAM market oversupply in the second half of 2012.

Moreover, TrendForce forecasts that PC DRAM prices will recover considerably in the second half of this year, given that manufacturers may increase inventory levels or double book orders to meet the stronger demand in the second half due to seasonality.

Elpida, the world’s No. 3 DRAM maker, filed for bankruptcy protection from creditors with the Tokyo District Court on Feb. 27, with debts of about 448 billion Japanese yen (US$5.42 billion). It currently holds 64.7 percent of Rexchip.

Rexchip said Elpida and Powerchip accounted for 88 percent and 12 percent, respectively, of its sales revenue in 2011, and added that it began shipments exclusively to Elpida in August last year.

(By Jeffrey Wu)

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