Japanese Memory-Maker Elpida Files for Bankruptcy

The biggest bankruptcy filing in history occurred recently by Japanese company Elpida. The company, which was the only business left in Japan to manufacture DRAM (the memory responsible for energizing many of our digital devices from smartphones to tablets to desktops) was drowning in debt that totaled over 5 billion dollars, left with no other choice but to surrender. In spite of filing for bankruptcy, Elpida will still be manufacturing RAM – however, as a result of the bankruptcy, it is highly unlikely that Japan will recover well enough to rejoin the DRAM business.

Elpida’s biggest challenge was in largely to overcome the decreasing price of DRAM, which steadily declined with emerging competition from companies like Samsung and Hynix, both in South Korea. In addition, the Japanese yen forced Elpida to maintain high costs and also increased the cost of the company’s operations pretty much across the board. And to add to the company’s distress, it remains that digital products like smartphones and tablets do not use as much DRAM as their counterparts like notebooks – and their dependence on flash storage keeps Hynix and Samsung strong in the game.

It was about ten years ago that Elpida was created, as a result of Japan’s top DRAM producers amalgamating their businesses in order to contend with companies abroad. Elpida remained in 3rd place amongst the best memory manufacturers in the world as of the third quarter of 2011, but apparently this was not good enough to overcome its massive debt.

There are rumors regarding a possible merging of Elpida and Micron (a partnership which has the potential of securing 2nd place in the race of memory-makers), however, the talk is currently only speculation. Eplida will most likely have to cut down on all of its current operations in order to reduce costs, as well as maybe sell off segments of the business, in order to survive.

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