Apparently, buying Elpida is not a strategically good decision

May 4, 2012 12:06 GMT  ·  By

Elpida has been in treacherous waters for some time now, having filed for bankruptcy and putting itself up for auction, but those willing to buy it get fewer and fewer each month.

Elpida used to be quite an important name among the makers of semiconductors, especially NAND and DRAM chips.

Unfortunately, the memory market, especially that of DRAM, has suffered from a severe oversupply over the past few years.

Somehow, Elpida saw the worst of it, to the point where it tried to get the government's help to stay in business.

The request was denied, so filing for bankruptcy was all that was left to do.

Now, there is an auction, of sorts, going on to determine who will acquire all the Elpida Memory assets.

Among them was SK Hynix, but the IT player has reportedly chosen to back out of the bidding.

“SK hynix’s board decided not to participate in the second round of bidding for the bankrupt Japanese chipmaker. Board members reached a consensus that Elpida has no strategic value,’’ said SK Hynix Chief Executive and SK Group Chairman Chey Tae-won in a meeting with reporters at SK Hynix’s main office in downtown Seoul.

“The withdrawal from Elpida doesn’t mean SK hynix would be passive in mergers and acquisitions. But currently, acquiring Elpida is against our strategy.”

At this point, only Micron Technology and a group of private equity funds (Hiny Capital and Hony Capital) are still in the race, if it can even be called so.

“Buying Elpida is too much for SK, currently. The withdrawal from the deal will help SK hynix strengthen its bottom line and regain investor confidence as the benchmark chip prices are rising with major set makers rising their inventories ahead of the back-to-school season in fall,’’ said Shin Hyun-joon, an analyst at Dongbu Securities.