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Micron To Acquire Elpida Memory for $2.5 Billion
Micron To Acquire Elpida Memory for $2.5 Billion

By Jennifer LeClaire
July 2, 2012 2:36PM

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Elpida has built a strong presence in mobile DRAM, targeting mobile phones and tablets. Meanwhile, Micron is a leader in delivering enterprise DRAM solutions for networking and servers as well as offering a wide product portfolio in NAND and NOR. Micron said combining the two portfolios will strengthen its position in the memory market.

In a move to beef up its manufacturing capabilities, Micron Technology plans to acquire Elpida Memory in a deal worth about $2.5 billion.

Micron is essentially picking up the pieces of the bankrupt Elpida. Micron will pay about $754 million in cash for the company itself, then spend about another $1.75 billion to cover the company's debt.

Micron also announced plans to acquire Powerchip Technology Corp.'s 24 percent share of Rexchip Electronics Corp. Micron will pay about $334 million for those assets. Micron CEO Mark Durcan said Micron is working to create the industry-leading pure-play memory company.

"Today's transactions will help strengthen the combined companies' market position in the memory industry through increased research and development and manufacturing scale; improved access to core memory market segments; and additional wafer capacity to balance among DRAM, NAND and NOR memory solutions for the ultimate benefit of Micron and Elpida customers," Durcan said.

Moving into Mobile

As part of the acquisitions, Micron will pick up Elpida's 300-millimeter DRAM fabrication facility in Hiroshima, Japan; an approximate 65 percent ownership interest in Rexchip, whose assets include a 300mm DRAM fabrication facility in Taiwan; and an assembly and test facility located in Akita, Japan.

The fab assets of Elpida and Rexchip together can produce more than 200,000 300mm wafers per month, which would represent about a 50 percent increase in Micron's current manufacturing capacity.

Elpida has built a strong presence in mobile DRAM, targeting mobile phones and tablets. Meanwhile, Micron is a leader in delivering enterprise DRAM solutions for networking and servers as well as offering a wide product portfolio in NAND and NOR. Micron said combining the two complementary product portfolios will strengthen its position in the memory market and help it provide customers with a more complete set of high-quality solutions.

Diversifying Micron

Brad Shimmin, an analyst at Current Analysis, said small footprints with low power utilization multi-core architecture are dominating the current mobile hardware landscape. All you have to do to recognize that is to see where Microsoft is taking Windows 8.

"To make Windows 8 operate on a mobile device with both performance and longevity for the battery, they really had to change the way they architected their software," Shimmin told us. "You can see it reflected in a lot of architectures that mobile device manufacturers like Samsung have taken with heavy multi-core solutions."

With changing architectures, Shimmin said the way hardware manufacturers are supporting it is also changing. Micron made a name for itself in the traditional DRAM market, but is may have an opportunity in mobile DRAM via the acquisitions.

"I can see a vendor that specializes in that flash RAM technology finding some interesting opportunities they want to pursue," Shimmin said. "The DRAM market is a very mature marketplace, so I could see Micron wanting to diversify."

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