NEC, Hitachi mull DRAM dissolution

NEC and Hitachi are mulling over the dissolution of their memory manufacturing joint venture and fleeing the DRAM business entirely, according to investors cited by Bloomsberg.

NEC and Hitachi are fifth and seventh biggest DRAM makers respectively and have suffered badly with this year's collapse of DRAM prices - down 90 per cent at the bottom of the slump. The duo had agreed to combine their DRAM operations into a single operation, called Elpida, to bulk up against bigger competitors.

But mass production through the unified subsidiary has already been delayed to December 2002 (slipping badly from its original target of September 2001); and the capital requirements are huge if the duo are to keep pace in an market which is still haemorrhaging money.

Industry consolidation in recent weeks also makes the Elpida strategy begin to look rather irrelevant. Perhaps Infineon will seize the day. The German chipmaker botched its chance to buy Toshiba's DRAM business. And even though it is the world's fourth biggest manufacturer of DRAM, it risks seeing Micron pull away, alongside Samsung, into an unreachable market position.

This month Micron (No.2 in the DRAM making league tables)took out Toshiba (No.6), buying the Japanese firm's US DRAM plant, and enabling its former rival to close down elsewhere in a semi-orderly fashion.

News source: The Register - NEC, Hitachi mull DRAM dissolution

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