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Japan's only dynamic random-access memory (DRAM) chips maker, Elpida, delisted on the Tokyo bourse on Wednesday, marking the biggest corporate failure in Japan's manufacturing history.
But experts say Elpida's fall is desirable for the struggling DRAM business. Mark Newman, Senior Analyst for Global Memory & Consumer Electronics at Sanford C. Bernstein, agreed.
"What’s key in the DRAM industry is supply and demand balance. Currently, regardless of Elpida’s delisting and bankruptcy filing, we’re still in over-supply in the DRAM industry," Newman told CNBC.
Newman explained that Elipda’s demise could reduce the current over-supply in the DRAM industry as a result of consolidation.
"Any kind of scenario that takes some of that capacity out of the market through some kind of acquisition such as Micron buying one or two of Elpida’s fabs we believe will lead to supply coming out of the market permanently which will lead to DRAM price recovery," he said.
Newman predicted that the DRAM industry will transition into a profitable oligopoly with only three survivors. "There’s only room in this industry for three competitors. The DRAM industry has not grown on a revenue basis since the '90s, it’s very volatile," he said. "I think the three survivors here are Samsung, Micron , and Hynix—Samsung being the clear leader."
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