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Elpida fears it might go under due to rising debt
Reported by Dean Wilson on Tuesday, February 14 2012 11:57 pm
Japanese chipmaker Elpida Memory said its future is uncertain as it finds it increasingly difficult to repay its growing debts.
Japanese chipmaker Elpida Memory said its future is uncertain as it finds it increasingly difficult to repay its growing debts.
The company, which makes DRAM chips, has unto April to pay back money it owes, but it said it might not be able to remain in business, suggesting bankruptcy is the most likely option as it approaches the deadline.
Elpida had hoped to secure funding by the end of March, but now it believes it might not get this. Some analysts expect the Japanese government to step in to provide financial aid, particularly considering it provided funding for the company in the past.
There are significant doubts over the future of the company today, however, as Elpida revealed that its discussions with the Development Bank of Japan and its main lenders fell through. Merger talks with Nanya Technology also appear to have gone nowhere.
The chipmaker needs a lot of support to pay back 92 billion yen ($1.2 billion) worth of bonds and loans. Elpida has been struggling to repay this, as chip prices continue to plummet and the company has been making significant losses.
Part of Elpida's struggle is due to Samsung's expansion in the chip sector, which has driven prices down and made Elpida's business model untenable. With few allies to look to for funding, it looks increasingly likely that Elpida will have to close up shop in the near future.
Source: Bloomberg
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