Chip maker Elpida's bankruptcy could potentially decrease dynamic random access memory (DRAM) supply and boost prices, according to new research from IHS. The Japanese company bowed to $5.6 billion in debt last week after a government bailout and competitor buyouts failed to materialize.
IHS Senior Principal Analyst Mike Howard called Elpida's fall from grace "a remarkable development" for the DRAM sector that will have far-reaching effects on the remaining players.
"A meaningful reduction in Elpida's manufacturing will cause the DRAM market to go into a state of undersupply, causing prices to increase," said Howard. "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 noted that Elpida's absence could drive up the global average selling price for DRAM more than 15 percent, or nearly double previous predictions, by the end of the year. The analyst revised his earlier 2012 DRAM industry revenue estimate from $24 billion to $30 billion.
"While it's unlikely that all of Elpida's production will disappear, this development could mark a new era for the DRAM market -- one marked by stronger pricing power for suppliers," he added.
Rival DRAM makers Micron and Nanya are in position to gain new customers from any Elpida cutbacks, while market leaders Samsung and Hynix likely won't see any business increases, said Howard.
Last month, IHS suggested that a Micron-Elpida merger would shake up the DRAM market and place the new company within points of Samsung's top spot.
