Fully utilize private-sector wisdom to bail out failed Elpida Memory Inc.
Japanese computer chipmaker Elpida Memory Inc. President Yukio Sakamoto attends a press conference in Tokyo, Monday, Feb. 27, 2012. (AP Photo/Shizuo Kambayashi)
-
(Mainichi Japan) February 29, 2012
Private-sector wisdom should be fully utilized to bail out the failed semiconductor manufacturer Elpida Memory Inc., which has gone under and applied for bankruptcy protection under the Corporate Rehabilitation Law.
Elpida, which is the world's third largest manufacturer of semiconductors for memory, fell into a financial crisis following a sharp plunge in the market prices of such products and the yen's steep appreciation. It attempted to rehabilitate itself through a capital alliance with another company, but gave up after failing to raise sufficient operating funds. Its liabilities total 448 billion yen, the largest amount ever incurred by a failed manufacturer.
-
Japan had once been dominant in the international semiconductor market, and it became a focus of attention in Japan-U.S. trade friction. In the 1990s, however, manufacturers in South Korea and other emerging economies went on the offensive, causing Japanese manufacturers' market share to decline constantly. Many Japanese manufacturers were forced to merge their semiconductor divisions, and the business of semiconductors for memory was integrated into Elpida.
-
Fierce competition for investment in such semiconductor businesses continued. Whenever there was an excess of supply, the market prices of such products plummeted, threatening Elpida's business activity.
-
Following the collapse of the Lehman Brothers in 2008, Elpida became the first company to receive an infusion of public funds to rehabilitate itself under the Law on Special Measures for Industrial Revitalization.
-
However, its business performance worsened rapidly due to a sharp plunge in market prices and the steep appreciation of the yen, and the period of its rehabilitation under the special measures law is due to end at the end of March.
-
Elpida sought to delay the deadline for repaying the public funds and obtain loans from private financial institutions to repay the taxpayers' money it had borrowed under the law. However, its negotiations on fundamentally rehabilitating itself, which is a prerequisite for such measures, did not proceed smoothly.
-
Efforts to rehabilitate Elpida under the special measures law, which were led by the Economy, Trade and Industry Ministry, have come to a deadlock. The government must take it seriously that the failure of Elpida could cost taxpayers a total of 28 billion yen.
The government led the rehabilitation of Elpida on the grounds that the semiconductors for memory sector is an industry indispensable for Japan. However, decisions on what industries are necessary for Japan should be left to the discretion of the private sector that invests funds in various businesses.
-
New products, such as smartphones and tablet computers, will continue to hit the market. Those in the private sector are urged to discuss how to ensure that Japanese businesses retain their ability to develop semiconductors for memory that are suitable for such new products and that Japanese companies can utilize them.
-
Elpida will aim to rehabilitate itself after its debt workout is completed. However, the failure of the company is expected to contribute to a realignment of the semiconductors for memory industry on a global scale.
-
It is possible that an overseas manufacturer will place Elpida under its umbrella. However, South Korean manufacturers that have continued making massive amounts of investments are enjoying an overwhelming share on the global market.
-
We should keep in mind that South Korean manufacturers may become the only suppliers of such semiconductors.
It is necessary to prevent fair competition from being restrained in realigning the industry.
Click here for the original Japanese story
No comments:
Post a Comment