DRAM maker Elpida Memory is in trouble, failing to obtain financing for 92 billion yen worth of bonds and loans due by April.
While dynamic random-access memory has been in huge demand due to its role in smartphones and tablets, the industry is in heavy competition, with Samsung Electronics and Hynix Semiconductor taking the top spots, driving down margins.
Elpida Memory has also struggled with the strong yen, which makes its products less cost-competitive. However, it remains one of the chip suppliers for Apple’s iPad and iPhone products.
In the last quarter of 2011, Elpida posted a loss of 42.15 billion yen.
In a bid to pay back the bonds and loans, there are desperate talks of taking investments from business partners and shareholders, advance payments by customers, and even a Japanese government bail-out. There are also rumours of a planned merger with Micron Technology and Nanya Technology.
Analysts say if Elpida Memory fails, the DRAM industry would be losing a competitor, meaning more risk of an oligopoly, which could lead to a rise in prices.