Micron Technology Inc., (NASDAQ:MU) Purchases Japanese Company Elpida
Denver, CO, 08/01/2013 (Avauncer.com) – Shares of Micron Technology Inc., (NASDAQ:MU) rose 5.08% to close at $13.24. This was the close to the upper end of its 52-week price range of $5.16 to $14.60. However, shares remained moderately traded with 45.06 million shares exchanging hands, close to its average volume of 48.82 million shares.
This was after the news of Micron purchasing Elpida Memory Inc., hit the market. This has brought an end to the year long negotiations between the two companies. This is expe3cted to help Micron boost its power in the market where it was once considered weak. The purchase has now put Micron on number 2 position, ahead of Korea’s SK Hynix Inc., However, it still trails far behind Korean giant Samsung Electronics Co. The purchase shall help the company mitigate from the price swings that have led to the erosion of company’s profits in the recent past, which was witnessed by loss for the past 2 years, only to end in the last quarter.
The company plans to further invest in research and development, thereby helping to develop a broad set of products. The purchase is expected to lock the losses which the industry has been suffering with increased number of chipmakers, who have ushered in a tough competition by producing low cost chips, in an effort to gain markets share. Such purchase helps consolidate the market, leaving only the big players in the arena.
Elpida’s strength lies in its mobile DRAM sales and technology. The takeover gives Micron a market share of 25%, up from the current market share of 5%. However, one needs to be cautioned about the future prospects of Micron when it comes to mobile market. This is so because the company had earlier unsuccessfully tried to secure a footing in the mobile market, by acquiring Numonyx, a Swiss company. This was to make its presence felt in the wireless memory products. This led Micron to miss the opportunity to capitalize the boom which was seen in the mobile market, which led to considerable loss of potential revenue.