Editor's note: An earlier version of this story incorrectly omitted the source of the reported amount of Elpida Memory's revenue in its latest quarter. This is a corrected version.
Micron Technology Inc. is one of the big guys now.
After more than a year of negotiations, Micron on Wednesday completed its purchase of Elpida Memory Inc., which analysts say will help Micron grow and give it more power in markets where it was once weak.
Buying Elpida makes Micron the No. 2 memory chip maker in the world, ahead of Koreas SK Hynix Inc. and behind Korean giant Samsung Electronics Co. Micron and Elpida have bobbed between third and fourth place for years. Microns greater influence will help it weather price swings that have hurt company profits and contributed to two years of red ink that ended last quarter.
How will this affect the Valley?
Micron executives arent saying whether the purchase of Elpida will translate into more jobs at its Boise campus. A strong Micron will only benefit Boise, spokesman Dan Francisco told the Idaho Statesman.
Micron has about 5,600 employees in Boise.
Executives say it could strengthen research and development, a key activity on Microns Boise campus, where an 111,000-square-foot research and development facility was recently completed.
It is going to expand our need to develop a broad set of products, which falls back to continued investment in research and development, Micron President Mark Adams said in June 2012.
The purchase also could change research and development at Elpida, said Mike Howard, a semiconductor analyst for IHS iSuppli and a former Micron employee.
Elpida does top-notch research and development in dynamic random-access memory, a common form of memory chips used in personal computers and mobile devices. It is possible some of Microns DRAM research could move to Japan to be closer to the Elpida plants, Howard told the Statesman.
He said Microns Boise campus could focus its research on flash, an increasingly popular memory product for the wireless market that is now Microns No. 1 product. Boise is not far from a Micron flash facility in Lehi, Utah.
What does Elpidas purchase do for Micron?
It helps usher in a world with fewer periods of industrywide losses caused by overproduction as chipmakers fight for greater share of a commodity-style market.
Im a true believer that the memory industry going forward is going to be a much, much better industry, CEO Mark Durcan told Bloomberg News. He sees a future for Micron when in the worst of times were still making a little bit of money. In the best of times were doing very well indeed.
Elpidas strengths include its mobile DRAM technology and sales. The takeover instantly gives Micron 25 percent of the mobile DRAM market, up from about 5 percent now, Howard said.
Microns prior attempts to secure a footing in the robust mobile market fell short. Micron bought Numonyx, a Swiss company, in hopes of bolstering its wireless memory products. That didnt work, so Micron missed out on the first part of the mobile-device boom, its executives have said.
Microns worldwide workforce will increase from 27,400 to about 32,000. The company hasnt said whether any employees will lose their jobs.
Microns annual revenues were $8.2 billion in 2012, the highest of any publicly owned Idaho company. IHS iSuppli says Elpida reported revenues of $1.3 billion in the past quarter. The combined companys revenues could top $13 billion.
The deal increases Microns memory production capacity by 45 percent.
Micron also closed on its acquisition of a 24 percent share of Rexchip Electronics Corp. in Taiwan from Powerchip Technology Corp. Elpida had a 65 percent stake in Rexchip, so Micron now owns nearly 90 percent. Micron said it is now Taiwans second-largest employer.
How did the Elpida purchase come about?
Elpida filed for bankruptcy in early 2012. Its bankruptcy marked one more step in the long, slow consolidation in the worldwide memory-chip industry. The company had gone through five unprofitable quarters and faced liabilities of $5.5 billion.
Micron announced in May 2012 that it was in talks with Elpida. Two months later, Micron announced plans to buy the company for $2.5 billion. Micron spent the next year fending off challenges from some bondholders who hoped for a better deal, and securing approval from Japanese courts. The yens value fell during that time, lowering the price to about $2 billion.
Micron stock rose 5 percent to close at $13.24. The stock traded around $6.50 when reports of Microns possible takeover first surfaced 15 months ago.
What kind of shape is Elpida in?
Better than you might think, considering it went bankrupt, Howard said. Elpida is lean, with about 5,000 employees, and it reported a 23 percent increase in revenue in the past quarter, according to IHS estimates.
If people thought Micron was buying a lemon, he said, they are really making lemonade out of it.
Micron got a screamin deal with Elpida, said Betsy Van Hees, vice president of equity research for Wedbush Securities in San Francisco. When Micron first sought Elpida, the memory market was in a slump. Now it will own a larger share of the market at a time when prices are up and supply and demand are in balance, she said.
Bill Roberts: 377-6408, Twitter: @IDS_BillRoberts
Bloomberg News contributed.