And Then There Were Three?

The seven biggest memory manufacturers in the world are:

1. Samsung
2. Micron
3. Hynix
4. Infineon
5. NEC
6. Toshiba
7. Hitachi

Number Two has or is in the process of taking over the memory business of Numbers Three and Six, which should make it Number One.

Numbers Five and Seven were planning to spin off their memory operations into a joint venture, but business has been so bad that this may well be off, which makes it likely that either Number Four or more likely One will buy them.

All this leaves it more likely than not that by the end of next year, we’ll have two biggies (Samsung and Micron) and one not-so-biggy (Infineon). One Korean, one American and one German company supplying the world.

Getting there might be very interesting, though. Historically, South Korea has been none too happy about having outsiders taking over their firms (which would be the case if Number Two takes over Number Three), especially when they have a local hero around (Number One).

However, times are changing in South Korea, as evidenced by the executives of Number One being fined over $70 million for what pretty much used to be business as usual in Korea (if not the world).

Number Two is trying to buy out its competition at bargain prices at the bottom of the market. In about two years, this will look like a great move, which is about eighteen months further down the road than Wall Street can see. Number Two may be on a pretty short financial leash.

Number Four seems to be the third man in a game of musical chairs with only two chairs left, but it’s hard to see them rolling over and playing dead too quickly. Just as hard to see them getting into frenzied bidding over the other rats jumping ship.

Overshadowing all the short-term shenanigans is the reality that current memory technology is pretty much on its last legs, and whatever its successor is, it’s going to be a lot different than what we have now.

That means a whole lot of retooling and scrapping what you got, which is not exactly what you want to hear when the business’ biggest product has been red ink lately.

While price wars will probably not go the way of the dodo, consolidation will probably mean fewer outbreaks, and generally higher prices than we’ve gotten used to down the road.

Email Ed