SAN FRANCISCO—Last week's bankruptcy filing by Japan's Elpida Memory Inc. should work in favor of other DRAM vendors, reducing supply and boosting average selling prices (ASPs) and revenue in the second half of 2012, according to market research firm
IHS iSuppli. If more than 25 percent of Elpida’s manufacturing capacity is taken offline, the global ASP for all DRAM shipments is projected to rise to $1.21 by the end of 2012, up 15.5 percent from $1.05 at the end of the first half of the year, according to the IHS iSuppli's memory and storage service. Without such a reduction in capacity, pricing would rise to $1.13 at the end of the year, up just 8.5 percent from the price at the end of the first half, according to the firm.
Elpida
filed for bankruptcy last week, blaming in part falling DRAM ASPs and failure to win a second bailout from the Japanese government. There is no indication at this time how much of Elpida's capacity could ultimately be taken off long through a bankruptcy restructuring.
"A meaningful reduction in Elpida’s manufacturing will cause the DRAM market to go into a state of undersupply, causing prices to increase," said Mike Howard, senior principal analyst for DRAM and memory at IHS, in a statement. "Shipments likely will decrease because of the Elpida bankruptcy, even though the resulting increase in revenue—driven by higher prices—will cause the market to perform better than expected in 2012."
Howard said the ultimate fate of Elpida’s manufacturing assets will be the major factor impacting pricing and revenue growth in 2012. "But one thing is certain: Elpida’s bankruptcy means the remaining DRAM players can look forward to a much rosier 2012 than they did just one week ago," Howard said.
In January, Handel Jones, founder and CEO of International Business Strategies Inc. (IBS), predicted that one or two DRAM vendors would file for bankruptcy this year. Also in January, Brian Matas, vice president of market research at market research firm IC Insights Inc.,
predicted consolidation among DRAM players, speculating that the increasing costs of production will cause some weaker players to drop out of the market and curb the over expansion that creates the boom and bust cycles that have plagued DRAM from the beginning.
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