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TrendForce: The Closing Of Micron-Merging-Inotera Deal Has Delay; Further Update Will Report In Later 2016

Inotera held a brief press conference on 20:00 of today (6/13, 2016), stating that Micron has decided to delay the schedule of merging Inotera, and the future update will be announced in later part of this year. Other than the NT$80B syndicated loan is still processing, current technical support between MMT (Micron Memory Taiwan) and Inotera has been put on hold. However, both Micron and Formosa group both stated that it is only the delay of schedule, not the end of discussion. Both parties will continuously seek for the possible solution in order to complete the transaction.

According to DRAMeXchange, a research division of TrendForce, since Micron got the plan of migrating 20nm, Inotera has replaced MMJ (Micron Memory Japan) and became the most important production site. Among Micron camp, including MMJ, MMT, Inotera and the original capacity that Micron processed in house, Inotera was the earliest one to start 20nm migration. In addition, other than PC and Server DRAM, Inotera extended a major scale of production into the most cutting-edged Mobile DRAM LPDDR4. As for now, the wafer start scale of 20nm is still showing upside, and it is scheduled to have full migration by Sept this year. In 2016, major contribution of Micron's bit growth is coming from Inotera, meaning Inotera plays an irreplaceable role of Micron camp.

This coloration plan is also crucial to Nanya's fate. As for the source of Nanya's future technology, addition to the minor transition of 20nm by the end of 2016, the following 1Ynm or 1Xnm are also depending on the licensing support from its partner Micron. Therefore, even there is still room of discussion on the swap percentage or the absolute price of shares, the closing of this case will eventually benefit Micron, Nanya and Inotera.

According to DRAMeXchange's previous report, in the first quarter of 2016, Samsung accounted 46.4% of total DRAM revenue, ranked number one position of all. SK Hynix was positioning in the second place (27.1%) and Micron was in the third (18.5%). Nanya ranked number four (only 3.7%). Out of Micron's total DRAM capacity of 315K per month, MMJ accounts about 100K, MMT accounts about 90K, and Inotera accounts 100K, about one-third of Micron's total capacity. Current major 20nm production is based in Inotera.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.