With the poor global economy coupled with a major oversupply on the market DRAM, makers have been among the hardest hit in the current economy. One of the largest DRAM makers in the world filed for the German equivalent of bankruptcy this week.
DRAM maker Qimonda filed for insolvency protection in German courts from its creditors as it tries to reorganize itself into something more profitable. Whether or not the DRAM giant will succeed or fail altogether remains to be seen.
Reuters reports that while Qimonda is one of the larger DRAM makers, its failure will not greatly impact supply of DRAM on the market. However, the financial troubles of Qimonda are expected to help investors better focus on other leading DRAM makers like Samsung or Hynix.
Qimonda held 9.7% of the global DRAM chip market in Q3 2008 with its own DRAM production making up about 5% of the DRAM market after its production partners are excluded reports iSuppli.
Qimonda is currently the fifth largest DRAM maker in the world; it once held the number two spot. The downfall of the firm was an oversupply that often left DRAM selling for under its production cost and increased pressure from creditors.
Jay Kim from Hyundai Securities said, "The Qimonda news is like rain after a long drought. Qimonda has reached a limit. This will underscore the strength of makers in the relatively superior position, even in the weakening market."
As a result of Qimonda filing, Kim changed his rating for the top DRAM maker Samsung to buy from market perform according to Reuters. The news of Qimonda's filing sent stocks in other major DRAM makers up. Elpida Memory saw its stock price grow by 6.4% on Monday and up 4% on Tuesday.
Qimonda isn’t the only DRAM maker feeling economic pressure. Samsung posted its first ever quarterly loss, which is contributed mostly to losses by its LCD and DRAM operations. To weather the economic storm the DRAM industry is changing with many smaller firms consolidating into one company and some of the smallest expected to be forced out of the DRAM market altogether.
Jim Handy from Objective Analysis said, "The Qimonda move is simply one more step toward the inevitable process of consolidation in DRAM. We anticipate that, by the end of 2009, there will exist at least one less DRAM maker.
Hynix, the second place DRAM maker, is among the firms seeking funds from the Taiwanese government to help it stay afloat until demand and prices for DRAM increase. Some are looking for the government to consolidate Taiwan's DRAM makers as well.
Taiwanese DRAM makers are still on a downward spiral that started in mid-2008. Samsung has seen its shares drop by 29%, Hynix shrank by 72%, and Elpida has declined 84%. The top DRAM maker in Taiwan -- Powerchip -- has seen a 64% loss over the same period.
U.S. DRAM maker Micron is also in serious financial trouble. The firm posted its eighth consecutive quarterly loss in December with a massive $706 million loss, nearly twice what was expected.
