Elpida’s bankruptcy brings stability to DRAM pricing

CALIFORNIA, USA: Elpida’s acquisition has been on cross roads since February. The acquisition of the bankrupt DRAM vendor by many big players like Micron, SK Hynix and Global Foundries has made Elpida even more popular.

After Elpida has filed for its bankruptcy, the analysts have noted that pricing in the dynamic random access memory (DRAM) market has become markedly less volatile.

According to IHS iSuppli’s Market Brief, DRAM pricing appears to have flattened since the announcement by Elpida that it owed billions of dollars in debt, even though the Japanese maker had been the third-largest DRAM supplier in terms of sales even as late as the first quarter this year.

For a 12 week period, a weighted average of DRAM spot price hovered between 235 at the start of the post-announcement period and 243 on May 21. The spread in the DRAM Index was much larger in a similar 12-week span prior to bankruptcy, ranging from 180 at the beginning of the pre-announcement phase up to 216 at the close of the same period. This represents quite a broader price band.

Since the announcement, the IHS iSuppli Momentum Indicator, has also stayed at the 50 per cent level. This indicates neutrality with no upward or downward movement.

The table sourced from IHS shows both the DRAM price index and Momentum Indicator taken in various times between and after the Elpida event, on December 5, at the beginning of the 12-week period before the announcement; on February 20, one week before the actual bankruptcy notice; on March 5, at the beginning of the period after the announcement; and on May 21, the end of the 12-week period after the bankruptcy filing. 

"With things still very much up in the air on how events will unfold, industry participants seem to be waiting for some indication of what the resulting industry structure will be like after an Elpida takeover is finalized. As a result, the current pricing environment appears to reflect this mood with the DRAM market eerily quiet, accompanied by visibly less pricing volatility atypical of the industry. Clearly then, a direct correlation exists between decreased DRAM pricing volatility and Elpida’s announcement given that the current period of flat DRAM pricing occurred right after the bankruptcy notice. The big question also remains whether normal volatility will return once some clarity emerges on the future of Elpida,” said Dee Nguyen, memory analyst at IHS.