Japan-based memory chipmaker Elpida Memory, which filed for bankruptcy protection on February 27 to restructure its debts and capital structure, might end up struggling to pay off its accounts payable, which will affect its industry supply-chain partners including Powertech Technology (PTI), Walton Advanced Engineering, Rexchip Electronics and Hermes Microvision, according to industry sources.
The four Taiwan-based companies still need to collect a combined accounts receivable from Elpida of almost NT$10 billion (US$340 million), the sources estimated.
In response, PTI and Walton both claimed they expect limited impact from the event while Hermes said that the company has taken measures to hedge accounts receivable to minimize any possible impact.
PTI indicated it is in talks with Elpida to understand the development of its business restructuring, and stressed that its operations and cash flow remain normal and should not see any impact from the insolvency over the short term. PTI disclosed that it still has about NT$4.5 billion in accounts receivable from Elpida, with the amount accounting for 6.4% of the company's total assets.
Meanwhile, PTI said its investment in Elpida's subsidiary EBS should not be affected by Elpida's bankruptcy proceedings as the unit is still operating.
Walton said that its accounts receivable from Elpida total around NT$510 million. It is also holding about NT$650 worth of wafers from the Japan-based client. Walton noted it will continue fulfilling orders as scheduled until any adjustment is made.
Walton added its investment in EBS will also see no impact form Elpida's bankruptcy filing.
Equipment supplier Hermes stated that it still needs to collect about JPY415 million (US$5.2 million) from Elpida and it has one set of equipment on loan to the client. Hermes said it is requesting the return of the unit and is in talks about the uncollected accounts.
Rexchip, a 64.7%-held subsidiary of Elpida, revealed that it still has US$135.1 million in accounts receivable from the financially troubled firm. Rexchip noted it has no plans to lower its capacity utilization rate unless it is told that its output for Elpida cannot be sold.
In addition, memory module maker Adata Technology has said that it expects little impact from Elpida's bankruptcy thanks to the firm's diversification strategy.
In other news, DRAM spot prices rose significantly following the bankruptcy filing. Spot prices for 2Gb DDR3 memory soared 16% in one day to top US$1 on February 28.