Elpida, Japanese Microchip Maker, Files for Bankruptcy

Elpida is the only manufacturer in Japan that produces DRAM chips which are used in cell phones and computers. Competition from Samsung, based in South Korea, and flooding in Thailand caused the company to see a decline in demand.

Elpida reported a debt of 448 billion Yen ($5.5 billion) in their bankruptcy filing. The company failed to recover after massive investments in production between 2006 and 2007. This caused Elpida to have an oversupply of DRAM chips, which drove down the prices. They were then hit by the global economic crisis of 2008 and last year’s flooding in Thailand.

Elpida is looking for an outside investor so they can continue operations. In 2009, the company faced similar troubles and received emergency loans from the government banks other entities in the amount of 110 billion Yen ($375 million).

DRAM chip prices have been on a steady decline and only four manufacturers have been able to remain solvent. Samsung hold 56 percent of the market, while Elpida had only a 15.4 percent share of the market.

An ailing business must sometimes seek out the expertise of a bankruptcy attorney, who can inform them of the ways they can reduce or eliminate their debts.

Bankruptcy lawyers will be able to clarify the different debt relief structures and determine which one is the most appropriate for the businesses’ needs.  A consultation with a bankruptcy attorney can alleviate fears and inform a business how they can return to financial solvency.