This is a turn up for the books. Micron is buying Toshiba's commodity DRAM business, in effect setting the long-predicted consolidation of the memory industry in train. To be precise, Micron is buying the assets of Toshiba's US DRAM operations for an undisclosed sum, while Tosh is to stop making commodity DRAM and is phasing out production in Japan.
The deal is struck against the backdrop of a market in freefall - unit prices have fallen up to 90 per cent on commodity lines and worldwide sales will be $8.5bn in 2001, less than a fifth of its 1995 peak, according to Gartner which expects sales to fall again in 2002.
But the shape of the consolidation is entirely unexpected: Micron was supposed to be courting Hynix; while Infineon was supposed to be buying up Toshiba. So where does this leave Hynix, and Infineon, the jilted bride and the spurned suitor?
At the start of December, Micron and Hynix confirmed that they were in talks about merging their DRAM ops. And last week, Lee Kwang Seok, an official at the Hynix Restructuring Committee, said: "We predict Micron will come back with an offer if we stick to the schedule." He was slapped down by his boss on the committee who said his colleague couldn't know and shouldn't have said when Micron will table an offer.
Who else would take on the mare's nest that is Hynix? Well... Hynix always has Samsung, the strongest player in the DRAM market, to turn to. Perhaps its Korean compatriot can better see a way through the Hynix forest of debt than could Micron.
As for Infineon: suddenly it doesn't look so big when up against Samsung and Micron/Toshiba. The options for bulking up quickly- we're rejecting the possibility of a Hynix tie-in - look very limited.
And how did it mess up on the Tosh deal? As recently as December 12, the long-mooted takeover was supposed to be on the cards. It appears that Infineon miscalculated the anxiety of Toshiba to exit the DRAM business and sought too hard a bargain.
Infineon insisted that Toshiba hand over its flash memory business in any transaction - which is not included in the Micron deal - and it also publicly announced that did not want to pay Toshiba any money for at least 18 months. We're guessing - it's only memorandum of understanding stage - that Micron will part with some hard cash for Toshiba's Virginia. USA plant.
Hynix yesterday raised contract prices of DRAM by between 10 and 20 per cent, the second time in less than a month. ®