According to a company statement released Monday, Micron is buying Japanese chip maker Elpida for $750 million in cash, and $1.75 billion in future installments. They also announced they would buy a 24% stake in Taiwanese chip maker Rexchip. With these deals they will be come a supplier for Apple.
For Micron, the long-speculated acquisition pushes it further into manufacturing memory chips for consumer electronics such as smartphones and tablets. While Micron is a leader in fabricating DRAM solutions for networking and servers that are used by large businesses, Elpida has a strong presence in consumer-oriented hardware.
With the purchase of Elpida, a supplier for smartphone and tablet makers like Apple, Micron will roughly double its market share of DRAM memory chips, putting its global market share at almost 25%.
“Terms of the deal are attractive, as we believe Elpida and Rexchip provide Micron with considerable manufacturing scale and R&D synergies,” wrote RBC Capital Markets research analyst Doug Freedman in a note to clients reacting to the deal.
Micron has posted losses in the past four quarters. The company’s shares rose over 4% to $6.61 in Monday trading.
“We are creating the industry-leading pure-play memory company,” said Micron chief executive Mark Durcan, in a statement. “Today’s transactions will help strengthen the combined companies’ market position in the memory industry through increased research and development and manufacturing scale; improved access to core memory market segments; and additional wafer capacity to balance among DRAM, NAND and NOR memory solutions.”
