Technology

Elpida: Operating Loss in Exchange for Market Share

The company is determined to adopt kamikaze measures for a bigger piece of cake

By Bogdan Botezatu, Hardware Editor

5th of December 2007, 16:10 GMT

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Japanese chip maker Elpida Memory is ready to sustain some financial loss in the operation process in order to snatch a bigger piece of market share from the bigger DRAM producing competition. Elpida spokeswoman Kumiko Higuchi stated that the company is ready to enter the operating loss game if the DRAM prices freeze at the current levels.

The statement comes after a period when Elpida has been envolved in a face-off with the DRAM titans Samsung Electronics and Hynx Semiconductor. Elpida's president, Yukio Sakamoto thinks that "It would probably be a small loss", as the DRAM prices are continually falling. At the moment, many DRAM chip producers are about to collapse, because the final price per DRAM chip does not even cover the production costs.

The DRAM industry is weakened because the markets are oversaturated and the strong competition in the field takes DRAM prices extremely close to the ground. "DRAM price falls have hit bottom", Sakamoto said, mentioning that PC memory prices are not likely to grow until January-March. The statement should be regarded carefully, since Sakamoto had wrongly predicted DRAM prices going up back in May.

Elpida's politics is heading more towards premium DRAM products that can be found inside the 3rd-generation of intelligent mobile phones sold by Japanese carriers. This area is safer since the offer does not even meet the demand. According to Sakamoto, if there is a fall in the mobile DRAM prices, it would be up to 30 percent, which makes these products more stable than PC memory chips (that dropped more than half in 2007).

The company is alleged to start mass-production for the 65-nanometer product line until March, which would result in more powerful chips and at the same time, lower production costs implied by smaller circuitry.

TAGS:

Elpida | DRAM | 65-nanometer | stock

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