Elpida delays China manufacturing joint venture on DRAM market's 'unprecedented slump'

Elpida and SVG hold off on a planned 300-mm joint venture by at least a year because of DRAM market conditions.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 11/7/2008

Elpida Memory Inc will delay the start of a previously announced, China-based DRAM manufacturing joint venture by at least a year.

Tokyo-based Elpida planned the manufacturing joint venture with SVG, a Chinese venture capital group based in Suzhou City, and was scheduled to begin operations in the Q1 2010.

"However, given an unprecedented slump in the DRAM market and the uncertain global economy, Elpida and SVG decided to delay the start of the operations for about one year or until a market recovery is forecast," the company said in a statement today.

The DRAM market is not expected to fully recover any time soon. Other DRAM makers, including Qimonda, have been hit hard by oversupply and weak ASP (average selling price) market conditions. Qimonda in October announced it would slash 3,000 jobs and exit 200-mm manufacturing. Qimonda also announced it would sell its stake in Inotera Memories for $400 million to Micron Technology as it struggle with DRAM market conditions.

Elpida said it and SVG will determine the best time to bring the China facility into operation by carefully observing DRAM market conditions.

The company separately announced fiscal Q2 results today with sales of $1.16 billion (113.6 billion yen) up 4% quarter over quarter. However, gross losses of  $81.4 million (8 billion yen) climbed from the previous quarter's $10 million (1 billion yen) loss.

The planned 300-mm joint venture is slated to be located in Suzhou Industrial Park, Suzhou City, Jiangsu Province, China, with initial capacity of 40,000 wafers per month, scaling to 80,000 wafers per month at a later time.