Appleton's death could delay DRAM consolidation

SAN FRANCISCO—The death of longtime Micron Technology Inc. Chairman and CEO Steve Appleton could throw a kink in rumored collaboration talks between Micron and Japan's Elpida Memory Inc. and delay needed industry consolidation, with significant consequences, according to market research firm TrendForce.

"At the moment, the industry can only hope for Micron to quickly ascertain its management team and future direction, bringing the company back on track for the tasks ahead," TrendForce said in a report circulated Saturday (Feb. 4).

Appleton died Friday when a small plane he was piloting crashed in Boise, Idaho. Micron's board of directors Saturday appointed D. Mark Durcan, formerly the company's president and chief operating officer, to the position of CEO. Durcan had been Micron's acting CEO since Appleton's death, in conjunction with company bylaws.

Elpida, which last week reported its fifth consecutive quarterly loss and is struggling under a heavy debt burden, was rumored to be in talks with Micron over a possible merger of investment in recent weeks. Elpida President Yukio Sakamoto seemed to throw cold water on the idea last week, reportedly saying that if Elpida isn't strong on its own a merger wouldn't help.

Micron last month announced that Durcan planned to retire in August, at the conclusion of Micron's fiscal year. But a spokesman for the company said Saturday that Durcan has put off his retirement plans indefinitely in the wake of Appleton's death and his appointment.

TrendForce, which issued its report prior to Durcan's appointment, said the uncertainty could have significant impact on the development of the DRAM industry in Taiwan, the U.S. and Japan. But with Durcan now entrenched in the role of CEO, his viewpoint will obviously be critical to any possible deal with Elpida or other merger and acquisition activity Micron is likely to engage in in the DRAM space and elsewhere.

"We are deeply saddened by Steve's loss and will miss his hand at the helm," Durcan said in a statement issued by Micron Saturday. "I have provided the board my ongoing commitment to work with the management team and continue to move the company forward."

The DRAM industry is currently under significant pressure, with declining average selling prices weighing heavily on participating companies' balance sheets. Some analysts believe that some of the weaker DRAM players may not survive the current down cycle.

According to TrendForce, Micron was the fourth largest DRAM vendor with market share of 11.8 percent as of the third quarter of 2011. The company, which also makes NAND flash chips, was also the fourth-largest NAND player, with market share of 11.3 percent, in the third quarter, according to the firm.

TrendForce noted that Appleton faced several challenges to the industry during his tenure, but was able to lead Micron through economic downturns. Micron's acquisitions under Appleton of Texas Instruments Inc.'s DRAM business in 1009 and Toshiba's DRAM business in 2001 both alleviated DRAM oversupply conditions and secured Micron’s sustainable core competence of technology value, according to TrendForce. "His death is without a doubt a great loss of talent for the industry, and it will also pose challenges for Mircon’s management," TrendForce said.

Appleton's death could delay DRAM consolidation

TAG:Steve Appleton Mark Durcan DRAM Micron Elpida