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Elpida Bankruptcy to Increase DRAM Prices, Say Analysts

By - Source: IHS | B 26 comments

Expect the bankruptcy filing of Elpida to result in higher prices for DRAM in the second half of the year.

With Elpida's plunge into bankruptcy protection, market research firm IHS estimates that prices for memory will increase by about 15.5 percent if more than 25 percent of Elpida's production volume disappears. By the end of 2012, the average DRAM chip could cost $1.21, up from $1.05 in the first half of the year. If the production remains intact, prices are forecast to increase to only $1.13.

“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 at IHS. “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 that the bankruptcy alone, however, means that "DRAM players can look forward to a much rosier 2012 than they did just one week ago." As a result, the market research firm has increased its DRAM revenue prediction for 2012 from $24 billion to $30 billion.

While the fate of Elpida is uncertain at this time, the analyst noted that the chronically oversaturated DRAM industry may finally reach a state of supply/demand equilibrium.” Such a scenario could provide much more stable pricing for all DRAM makers. In the short term, IHS believes that Micron and Nanya will benefit the most from a possible supply shortage and gain market share as DRAM buyers are looking for supply alternatives. As the two dominant DRAM manufacturers, Hynix and Samsung are likely to already provide DRAMs to most major companies.

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Top Comments
  • 12 Hide
    Onus , March 4, 2012 2:12 PM
    Just once, I'd like to see an article in the form "[Event] will cause prices of [component] to fall."
Other Comments
  • 6 Hide
    nikorr , March 4, 2012 9:43 AM
    There we go ...
  • 6 Hide
    Unlimited1980 , March 4, 2012 11:06 AM
    lol.... elpida is a well known manufacturer, the 3. biggest worldwide
  • 0 Hide
    freggo , March 4, 2012 11:28 AM
    No 'hope' for Hope Inc ? :-)
  • 4 Hide
    ryandsouza , March 4, 2012 11:49 AM
    Just great... First HDDs now this.
    When will the prices start falling??
  • 1 Hide
    hixbot , March 4, 2012 12:00 PM
    If the higher prices will invrease overall revenue, then they are increasing prices too much.
  • -5 Hide
    billybobser , March 4, 2012 12:07 PM
    got 8 gigs is current setup, not set to change for 5 years I reckon given that I'll be migrating ivy/sandy next year and their lack of reliance on ram.

    Ram has been sold purely on marketting and fancy numbers and rarely on performance. I imagine people's choices have been more swayed on colour than on benchies. Prices go up, and people will stop buying (as they should have enough overfed by now) or go for the cheaper options.

  • 1 Hide
    digiex , March 4, 2012 1:04 PM
    After the hard disk price hike, another computer part going up, hope it will not happen.
  • 1 Hide
    Unlimited1980 , March 4, 2012 1:39 PM
    The prices are still down & cheap.
    So just don't waist time and buy all the RAM, that you think, you will nedd in the comin 2 Year 'till DDR4 is rouling the market (starting 2013, roaring 2014).
  • 12 Hide
    Onus , March 4, 2012 2:12 PM
    Just once, I'd like to see an article in the form "[Event] will cause prices of [component] to fall."
  • 2 Hide
    DRosencraft , March 4, 2012 3:23 PM
    Wasn't there an article just a few weeks ago claiming that DRAM manufacturers were going to start ramping production back up again becuase they had reached the supply/demand equilibrium? It may be my lack of understanding of the intricacies of markets and what not, but don't you price your products based on the cost you incur making them? In other words, if you make a million chips last quarter, but only sell 3/4 of a million, don't you just make 3/4 of a million the next quarter, using the left over 1/4 of a million from before as oversupply in case of a production miss this quarter?

    I don't understand why these memory chip makers are having so much trouble figuring out how many chips they need to make. I really can't think of another industry that has had so much trouble for so long figuring out their supply/demand structure. I meanm, Elpidia is a huge name in memory. There's no reason it should have gone bankrupt. It sounds to me like they got greedy, tried to push up production thinking they would certainly be able to sell all of it and make a huge profit, assuming the market saturation wouldn't catch up to them.
  • 0 Hide
    A Bad Day , March 4, 2012 3:25 PM
    "Alright ladies and gentlewomen, lets start cutting back on the amount of RAM in our laptops and desktops from 4 GB to 2 GB. That includes computers with i7 processors and mid-range graphic cards."
  • 1 Hide
    Marco925 , March 4, 2012 3:40 PM
    amdfreaknever heard of this company before.


    Pull open your computer and don't look at the Dimm, but look at the actual little black chips, ALOT of DIMMs have Elpida chips on them, plus we had that price fixing scheme last year.
  • 2 Hide
    lp231 , March 4, 2012 4:07 PM
    It's not like there is a natural disaster affecting all dram makers like we are at currently with HDDs.
    Elpida makes DRAM and they OEM to Ram makers like Crucial, Kingston, and others.
    Elpida isn't the only one in the world, you have micron, samsung, nanya, etc.
  • 3 Hide
    lp231 , March 4, 2012 4:10 PM
    amdfreaknever heard of this company before.

    It's because they don't sell their own ram. If buy value ram (those without heat spreaders), you may be able to see some uses Elpidia.
  • 1 Hide
    cbfelterbush , March 4, 2012 5:20 PM
    Ip231
    Quote:
    Elpida makes DRAM and they OEM to Ram makers like Crucial


    Not likely Crucial, Mircon is the OEM for Crucial, perhaps you meant Corsair? It is likely that Appletons death lead to this.







  • 2 Hide
    dco , March 4, 2012 6:22 PM
    This is not really going to make that much of an impact. A 15.5% increase on 8GB of RAM mean it goes from $40 to $46.2, sure any price increase sucks but it's not that big a deal in the scheme of the cost of a new build
  • 2 Hide
    azgard , March 4, 2012 8:47 PM
    DRosencraftWasn't there an article just a few weeks ago claiming that DRAM manufacturers were going to start ramping production back up again becuase they had reached the supply/demand equilibrium? It may be my lack of understanding of the intricacies of markets and what not, but don't you price your products based on the cost you incur making them? In other words, if you make a million chips last quarter, but only sell 3/4 of a million, don't you just make 3/4 of a million the next quarter, using the left over 1/4 of a million from before as oversupply in case of a production miss this quarter? I don't understand why these memory chip makers are having so much trouble figuring out how many chips they need to make. I really can't think of another industry that has had so much trouble for so long figuring out their supply/demand structure. I meanm, Elpidia is a huge name in memory. There's no reason it should have gone bankrupt. It sounds to me like they got greedy, tried to push up production thinking they would certainly be able to sell all of it and make a huge profit, assuming the market saturation wouldn't catch up to them.


    Here's some business economics for you. At the volume of production they have it cost's relatively little more to produce full output vs reduced output. Foundries are required to produce near max output almost constantly to make money as the operating cost's to keep a plant up and running consume a vast amount of the operating costs. Now they could rampdown production and try to 'meet' the market, the problem is if they miss a market forcast and end up short, they lose contract's to competitors and this has the potential to cost them a lot more money then an oversupply.
  • 0 Hide
    ProDigit10 , March 4, 2012 10:58 PM
    probably can't follow in on the DDR4 manufacturing.
  • 0 Hide
    blazorthon , March 5, 2012 3:31 AM
    Well, Elpida has been saying for a while that this was likely going to happen. I'm not sure why they are having problems like this when the other DRAM manufacturers aren't. Maybe they didn't diversify their products like many of the other companies did (Samsung is a great example). I don't know of any Elpida products besides their memory.

    Well, at least DRAM prices don;t matter too much like hard drive prices did. If DRAM goes up even 50%, it's a difference of only $15-30 for 2x4GB and I don't think they will go up even that much. Of course, any price hikes suck, but DRAM has been cheap enough lately... I wouldn't mind it if hard drive prices would just go back down.
  • 2 Hide
    memadmax , March 5, 2012 4:33 AM
    "Man made disaster"
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