Analysts have been claiming that Elpida is fast becoming the Greece of the DRAM industry and some think the Japanese government would be better off letting it go under.
Elpida said that it could obtain financing for $1.2 billion in bonds and loans due by April and it is headed up a brown creek without a means of propulsion.
Normally that would mean that the Japanese government might have to write a cheque to bail it out, but the strokers of beards and people in the know think that it might refuse this time.
By doing so it might force the DRAM industry closer to an oligopoly.
Rivals Samsung and Hynix shares rose at the news that Elpida was suffering. And the Taipei-based DRAMeXchange said in a statement yesterday that the hands of a doomsday clock of an oligopolistic state in the DRAM market moved closer to midnight.
DRAMeXchange said that if the Japanese government does not step in to offer assistance and Elpida backs out from the DRAM industry due to financial difficulties, the negative impact on the PC and DRAM markets will be severe.
With such a small number of companies involved in making DRAM competition is almost nonexistent and the suppliers can change what they like.
It thinks that the Japanese government will see sense and bail the outfit out. It would blemish its name by not supporting the supplier of chips because that would mean lenders won't get their money back and 6,000 workers may lose their jobs.
Yuichi Ishida, a Tokyo-based analyst at Mizuho Investors Securities told Business Week that Elpida's situation is similar to that of Greece. The government has to save Elpida because no one will benefit from it being flushed down the loo.
Others are not so happy. Takashi Aoki, a senior fund manager at Mizuho Asset Management, said that Japan's government shouldn't bail out Elpida because the country did not really need to have the DRAM makers as part of its national policy.
It's hard to see growth in Elpida and there are many developed countries that don't have DRAM makers, he said. But then there are lots of countries that dont have Ouzo or Nana Mouskouri either.