A group of Elpida Memory's bondholders oppose Micron's (MU +2%) bid to buy the bankrupt Japanese...

A group of Elpida Memory's bondholders oppose Micron's (MU +2%) bid to buy the bankrupt Japanese firm as too low, Reuters reports. The creditors have therefore contacted South Korea's Hynix (HXSCF.PK) - which dropped out of the auction - and U.S.-based GlobalFoundries about selling the company to them.
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  • Russ Fischer
    , contributor
    Comments (3018) | Send Message
    Aha! Someone has figured out that there are some deep pockets backing the Micron deal.


    Hybrid Memory Cube


    I'm not sure that investors understand the possible significance of this.


    1. Intel and Micron are the joint developers of the Hybrid Memory Cube.


    2. Intel and Micron have had a long standing joint venture in nand flash memory with a huge plant in Singapore.


    3. Earlier this year the two companies entered into a strange transaction. The transaction was represented as an "expanded" joint venture.


    The "expanded" relationship, on the surface, looks like Intel SOLD their interest in two nand factories for $600 million. Intel received $300 million cash and left $300 million "on deposit" with Micron. The value of those assets on the Intel balance sheet was $1.2 billion. That transaction effectively increased the book value of Micron by $600 million.


    3. Speculation is that, while this transaction looks like a reduction of the scope of the JV, the "expanded" part was the inclusion of DRAM in addition to flash memory. The selling of the Intel assets as at a discount would make the Micron balance sheet support a large borrowing in preparation for the Elpida bidding...which they subsequently did.


    4. Micron has become the selected bidder for the remains of Elpida.


    5. In the middle of all this uncertainty, Apple places orders that will secure half of the output of the largest Elpida fab. Why would Apple place huge orders with a bankrupt supplier?


    6. Intel needs a captive source for the Hybrid Memory Cube and flash memory for SSDs.
    The HMC will improve the performance of high end servers immensely and increase the price of those servers dramatcally. The HMC will probably be placed inside the CPU for maximum performance and, of course, make it proprietary to Intel.


    7. Apple needs a captive source (gets them away from Samsung) for mobile DRAM and, of course, nand flash memory.


    8. My WAG (wild axx guess) is that Intel and Apple buy the combined Micron/Elpida and turn it into a captive memory joint venture. A stand alone joint venture in order to keep the memory low gross margins from diluting the robust gross margin of Intel and Apple.


    9. The Micron shareholders will get bought out for about $15/share.


    Apple has apparently enlisted Intel in their efforts to screw Samsung. Between Intel getting the Apple "A" chip business and Samsung losing the Intel/Apple memory business, the net hit to Samsung could be $12 billion!


    That's really getting even!!
    21 May 2012, 10:26 AM Reply Like
  • cmosware
    , contributor
    Comment (1) | Send Message
    no matter what apple and intel does, samsung will adapt to situation
    and come out as ahead of compitition
    22 May 2012, 11:29 PM Reply Like
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