With its planned purchase of Elpida Memory of Japan, US-based Micron Technology will become the world's second-largest supplier of DRAM, according to IHS iSuppli.

Micron had been ranked the No.-4 global DRAM supplier in the first quarter, with US$759 million in revenues and a 12.2% share of the market. The company placed behind top-ranked Samsung Electronics, No. 2 Hynix Semiconductor and No. 3 Elpida. But with the purchase of Elpida, Micron's revenues and market share in the first quarter would jump to US$1.5 billion and 24.8%. This would allow Micron to edge out Hynix for the No. 2 position, IHS indicated.

"The purchase of Elpida represents a huge boost for Micron's status in the DRAM industry," said Mike Howard, senior principal analyst for DRAM & memory research at IHS. "Micron will see its market share and DRAM manufacturing base nearly double as a result. Furthermore, Micron is gaining access to some excellent mobile DRAM technology, which should greatly improve its product portfolio. The US$2.5 billion sale price is reasonable and shouldn't impact Micron's cash position adversely. It will likely take at least six months for the deal to close, but IHS expects a very quick transition and integration once it does."

Micron's acquisition announcement follows news of the bankruptcy of Elpida. The consolidation of the DRAM market set off by Elpida's bankruptcy and the subsequent purchase by Micron is bringing new stability to DRAM pricing, helping lead renewed growth to the market, IHS pointed out.

Global DRAM industry revenues this year is forecast to reach US$30.5 billion, up 3.3% from US$29.6 billion in 2011, IHS said. Although seemingly small, the revenue expansion for 2012 is a welcome development given the market's stunning 25% contraction in 2011. The overall picture will continue to brighten during the next few years, with DRAM revenues exceeding US$30 billion each year for the next five years and reaching US$39 billion in 2016, IHS noted,

Before Elpida's bankruptcy, the DRAM industry in 2011 had been bedeviled by excess DRAM manufacturing capacity, which drove down prices and caused revenue to decline. Compounding the difficulties last year was the October flood in Thailand, which depressed PC shipments - a traditional DRAM stronghold. The perceived scarcity of hard disk drives pummeled PC sales and thereby DRAM demand; and the paucity of hard drives meant PC manufacturers were paying more for storage - leaving even fewer dollars to spend on DRAM.