Micron Technology Inc.
) is just a step away from completing the much-awaited
acquisition of Japanese chip-maker Elpida. The deal, which was
announced in May 2012, took a long time to gather approvals from
different authorities and to satisfy legal requirements.
APPLE INC (AAPL): Free Stock Analysis Report
MICRON TECH (MU): Free Stock Analysis Report
SANDISK CORP (SNDK): Free Stock Analysis
STEC INC (STEC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Recently, Micron announced that it received an approval from the
Chinese Ministry of Commerce. In 2012, the deal got approval from
the U.S. Bankruptcy Court, the Japan Fair Trade Commission and a
district court in Tokyo. The deal still awaits waiver of certain
legal conditions and approval from creditors. Creditor votes are
due tomorrow, Feb 26.
The deal was valued at 200 billion Yen or $2.5 billion. Per the
deal, Micron won an exclusive right for paying off bankrupt
Elpida's debt. Additionally, Micron agreed to keep the two main
factories of Elpida in Japan, which also comes with a guarantee
to keep the current employees of the factory.
Micron received the acceptance of Elpida's trustees but the final
restructuring plan was due for approval by the local court and
the creditors of the company. Micron won the deal defeating Hynix
Semiconductor Inc. of South Korea.
There is no doubt that the acquisition will help Micron to expand
its operation across the globe with special emphasis on Japan.
Moreover, the technical know-how that the company gains from
Elpida will be of much use and will also help it to understand
the Japanese market better. Also, the fact that Elpida won a
major DRAM (Dynamic Random Access Memory) supplying agreement
), will give Micron another reason to cheer. With this, Micron's
wafer manufacturing capacity will increase nearly 50%.
With the acquisition, the number of leading DRAM chip
manufacturers will drop to three, namely, Samsung (the market
leader), Micron and Hynix Semiconductor. Previously, Elpida was
behind Hynix and Micron had the lowest market share.
Though Micron's prospects in the mobile DRAM market look
promising, it will not be easy to outpace Samsung. Samsung has
held the largest share of this market for years and there are
indications that it will sustain the same rank for the coming
years as well.
Stiff competition from
) are also concerns.
Currently, Micron Technology has a Zacks Rank #3 (Hold).