Frankfurt (Germany) – A $422 million rescue package sought after by Qimonda in December failed to materialize. In light of hard economic times, depressed DRAM prices and their inability to secure financing in time, German chipmaker Qimonda AG announced today that it would declare bankruptcy.
iSuppli has forecasted significant DRAM industry reductions over the next two years. A trend showing 35.2% growth in 2006, a -7.3% growth in 2007, a -19.8% growth in 2008, a -4.3% growth in 2009 before another positive 13.0% growth in 2010. However, the 2010 estimate of $27.3 billion is considerably less than 2007’s $31.5 billion.
In Q3’2008, Qimonda held 9.7% of the global DRAM shipments in its own branded sales. Today, Qimonda’s production has been cut in half to only 5%. According to iSuppli, global per-bit DRAM prices fell 51% in 2007, and 53% in 2008, compared to the annual average of only 30%. In Q3’2008, Qimonda shipped 26% of global graphics DRAM chips, 15% to 20% of the server DRAM market, under 10% of non-server DRAM for PCs.
Nam Hyung Kim, director and chief iSuppli analyst said, “The primary factors driving Qimonda into insolvency are the weak global macroeconomic conditions and the terrible state of the DRAM market. Since 2007, DRAM suppliers have spent billions on new capacity even amid weakening demand, contributing to oversupply, price declines and a massive market downturn that is hurting all suppliers.”
Additional factors leading to Qimonda’s insolvency are a falling behind in DRAM manufacturing process technology – compared to their previous leadership role, and the rate of “cash burn,” according to Kim.
Qimonda employs more than 12,000 worldwide, and was spun off by Infineon in 2006. Infineon still holds a 77.5% share in the company. Qimonda’s declaration of bankruptcy has forced iSuppli to cut its 2009 shipment growth from 35% to 30% for 2009. While this may affect the DRAM oversupply problem somewhat, it will not affect it significantly.