WHATS IN THIS FOR MICRON?
A bigger share of the dynamic random-access memory-chip market chips used in cellphones and computer hard drives. Micron had about 13 percent of the worlds market share; this move will give it about 25 percent. Micron will be one of three companies controlling 90 percent of the market, along with Samsung Electronics and SK Hynix, both in South Korea.
WHY IS THAT CONSIDERED GOOD?
Micron had so small a share of the DRAM market that it was in danger of becoming marginalized, said Mike Howard, an IHS iSuppli semiconductor analyst and former Micron employee. Micron struggled to expand DRAM capacity and research and development. Moreover, the company has had little clout when it comes to prices for DRAM, which can swing wildly. Low prices have contributed to the companys losses in each of the past four quarters.
I think those concerns are gone now, Howard said.
And with fewer companies holding greater market share, it should help even out prices for DRAM, analysts say. It gives them a bigger whip, said Vijay Rakesh, an analyst with Sterne Agee.
WHERE DOES ALL THIS LEAVE MICRON?
They own a larger share of a better market, Howard said. Micron President Mark Adams told Bloomberg News: Were pretty excited about where this puts us in the memory industry as a strong No. 2 after Samsung.
WHAT DID MICRON PAY FOR ELPIDA?
The total price is $2.5 billion. Micron will pay $750 million for Elpida assets when the deal closes, and Elpida will become a subsidiary of Micron.
Micron will use cash flow from Elpida operations to repay about $1.75 billion in debt in six installments between 2014 and 2019. The first installment is due in about 30 months. The amounts will be about $250 million a year between 2014 and 2017 and $375 million in 2018 and 2019. Analysts say the payout is interest-free. It's a clever bit of finance, Howard said.
HOW DOES THIS HELP
Micron is getting factories at less than a third of the cost of building them from scratch and expects to be able to reduce its spending on plants and equipment, said Mark Durcan, chief executive officer.
WHAT DO OTHERS THINK?
Investors reacted positively, sending Microns stock up 24 cents to close at $6.55.
WHAT DIFFERENCE DOES THIS MAKE IN BOISE?
Micron officials arent saying what it could mean for employment locally. Research and development operations at the Boise campus could be strengthened with the purchase of Elpida, Adams said last month.
It is going to expand our need to develop a broad set of products, which falls back to continued investment in research and development, he said.
Research and development is the focus of Microns work at Boise since the company laid off workers and stopped local production of wafers in 2008 and 09.
A SECOND PURCHASE
Micron also said it is buying Powerchip Technology Corp.s 24 percent stake in Rexchip Electronics Corp. for $334 million. Elpida has about a 65 percent stake in Rexchip, so this will give Micron a stake of nearly 90 percent.
Powerchip is a Taiwanese company.
Statesman wire services contributed.