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Analyst: Micron plays waiting game in Qimonda takeover

Posted: 30 Sep 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Qimonda takeover? DRAM? Micron bid?

Micron Technology Inc. is playing the waiting game before it buys Qimonda AG, or at least pieces of the troubled DRAM maker, according to an analyst.

In fact, some believe that Qimonda is running out of cash and could go under. Then, Micron could swoop in and buy some or all of the assets.

"We expect Micron to wait for Qimonda to fail, and then pick up the pieces at fire sale prices," said Daniel Berenbaum, an analyst at Cowen and Co. LLC, in a report.

"It appears that [Qimonda's] management may have missed its window to sell assets (particularly its stake in manufacturing partner Inotera) at a reasonable price," Berenbaum said. "We see insolvency as a very real possibility, with Micron the most immediate beneficiary as it should have the opportunity to snap up assets at fire sale prices."

Gregory Wong, the Forward Insights memory analyst who last week said Micron appeared to have a deal in place to take over a majority stake in Qimonda, said that the deal has run into complications. Wong said Micron probably won't buy Qimonda outright at this point, but that Micron buying Qimonda's stake in Inotera remains likely. Wong said he did not have specific information about the complications preventing a larger deal.

It's no secret that Qimonda is in trouble. "With no white knight in sight, we suggest that Qimonda's cash burn will likely drag the company under within the next two quarters," he said. "There are many possible scenarios, but we expect [Qimonda's] Dresden and Richmond fabs (around 4.5 percent of global DRAM supply) to come off line for some period of time. Ultimately, we think Micron will pick up the Richmond fab on the cheap, and Nanya will take over Qimonda's piece of the Inotera JV and start a supply/royalty arrangement with Micron."

On the New York Stock Exchange Sept. 26, Qimonda's shares were hovering around $1.68, down 8 percent from the previous day.

Taiwan's Nanya Technology Corp. and Qimonda have a joint DRAM manufacturing venture in Taiwan called Inotera. That venture also appears to be in limbo.

Micron recently entered into a separate R&D and DRAM venture with Taiwanese memory rival Nanya, which, turn, raises questions about the Qimonda-Nanya alliance. MeiYa Technology Corp. is the DRAM joint venture between Micron and Nanya.

- Mark LaPedus
EE Times

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