Japan's only DRAM chip maker files for bankruptcy

Elpida, Japan's only DRAM chip manufacturers have filed for bankruptcy, with losses of $5.5 billion, the biggest bankruptcy of a Japanese manufacturer so far.
Written by Hana Stewart-Smith, Contributor

Elpida, Japan's sole producer of dynamic random access memory (DRAM) chips, filed for bankruptcy on Monday.

They filed at the Tokyo District Court with total liabilities of 448 billion yen ($5.55 billion), the largest ever bankruptcy for a Japanese manufacturer so far.

The company had been struggling for some time, despite efforts to rebuild itself with support from the government. It was the first to receive aid from a government program launched in 2009, and was given an emergency loan from the Development Bank of Japan.

Elpida company president, Yukio Sakamoto, attributed the decline of the business to an inability to keep up with South Korean competitors, as well as the strength of the yen against the South Korean won.

"We have lost our competitive edge completely against South Korean companies as the yen has strengthened against the won," Sakaomoto said, adding that "our efforts as a single company alone cannot make up for a steep surge in the value of the yen over the past year."

Elpida was the third biggest DRAM maker when they filed for bankruptcy. Japan once had a considerable portion of the DRAM global market, with control of about 70 percent of it back in 1987.

However, as South Korean rivals such as Samsung steadily expanded their shares, companies like Elpida failed to keep up.  Samsung presently controls almost 40 percent of the global market.

Trade minister Yukio Edano has defended the government's decision to back the company in the past. He explained that, "it was impossible back then to foresee that the great earthquake and the Thai floods would happen one after another."

An inability to keep up with the shifts in the industry may also have contributed to the company's struggles.

Kim Hyung Sik, an industry analyst with Taurus Investment Securities, said: "Mobile DRAM is where the money is, and Samsung and other Korean companies control more than 70 percent of that market. Elpida couldn't hold out anymore."

With Elpida folding, Japan's stake in the global DRAM chip industry has effectively come to an end. The company will be officially delisted from the Tokyo Stock Exchange on March the 28th.


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