$2.5 billion deal makes Micron world’s second biggest RAM manufacturer

Idaho-based RAM maker Micron Technology yesterday agreed to acquire Japanese competitor and Apple supplier Elpida for the equivalent of $2.5 billion. Described as a “sponsor agreement” by the parties concerned, the deal makes Micron the world’s second largest manufacturer of RAM, behind only Samsung.

Korean firm SK Hynix has been pushed into third place, but still holds a significant share of the market — between them, the big three manufacturers now control 90 percent of the $30 billion industry, according to a report from Reuters. While enthusiasm varies, most analysts agree that the Micron/Elpida deal will help to calm a market that has seen extreme volatility in recent years.

Random Access Memory is a complex thing to manufacture, requiring huge investment in production facilities and infrastructure. But when these facilities are run at full capacity, supply can outstrip demand, driving prices into a death spiral. “The emergence of three major DRAM players will help DRAM chip prices gradually stabilize, bidding farewell to the price-slashing competition of the past,” Taiwanese research firm Trendforce tells Reuters.

What this means for consumers is less clear. With reduced competition, prices for standalone RAM sticks may rise, but what’s really going to have an impact is the reaction of device manufacturers. Companies like Apple and HP may choose to pass potential price hikes on to consumers or absorb the extra cost by making cutbacks elsewhere.