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Conference also hears of Elpida's plan to scale heights of DRAM market
TOKYO - Elpida Memory Inc. plans to become one of the world's top three DRAM suppliers by mid-decade, andwill consider an initial public offering to help achieve that goal, according to its vice president and general manager. Hidemori Inukai was one of several speakers at the Industry Strategy Symposium 2001 last week in Narita, Japan, who lamented the declining position of Japanese chin makers in the 1990s and called for a radical rethinking to regain lost ground.
In his presentation, Inukai pointed to a slide that showed the world's top five DRAM makers, and said the memory industry now favors only giants. While Samsung Electronics' market share percentage maybe pushing into the low 20s-higher than most analysts predict-and Micron Technology Inc. is also growing strongly, Inukai said Elpida's 13.6 percent share was looking increasingly puny.
Butto grow, Elpida faces a crucial problem, he said: cash. "Our line is only 50 percent the size of Samsung's. We need to raise funds." He suggested that an IPO couldbe in the offing in two years, when Elpida will be ready to assault its provisional market share target of 17 percent. The ultimate goal is 20 percent.
Elpida has to think big because the recent consolidation of DRAM players has created a market of titans that will continue to force out or consume second-tier manufacturers, Inukai said. Industry analysts have said that memory makers need to maintain a market share of at least 10 percent if they are to attain the productivity and economies of scale to survive. Elpida was created by merging the DRAM divisions of NEC Corp. and Hitachi Ltd., precisely to gain the market mass needed to compete.
Now that 10 percent rule is being rewritten, Inukai suggested. "In 1998 there were 23 companies producing DRAMs," he said. "Last year there were only 15. There is more consolidation ahead."
On top of the recent withdrawal of other suppliers from this memory sector, a larger specter haunts Elpida's bid to stay in the game: a disastrous 12 years that have seen Japan's global semiconductor market share...