« srachai family photo current 10 | トップページ | 米朝核合意 ウラン濃縮停止を見極めたい »

2012年3月 2日 (金)


--The Asahi Shimbun, Feb. 29
EDITORIAL: Elpida’s bankruptcy is a warning against easy government bailouts

Elpida Memory Inc., the world’s No. 3 maker of dynamic random-access memory (DRAM) chips used to store data in personal computers and other devices, has filed for bankruptcy protection under the Corporate Rehabilitation Law.

Elpida’s collapse under the weight of 448 billion yen ($5.6 billion) in liabilities represents the largest-ever corporate bankruptcy in Japan’s manufacturing sector.

Elpida is Japan’s sole remaining maker of DRAMs, created by integrating the DRAM manufacturing operations of NEC Corp., Hitachi Ltd. and Mitsubishi Electric Corp.

Elpida received an injection of 30 billion yen in capital from the government-owned Development Bank of Japan in 2009 following the global economic downturn triggered by the fall 2008 collapse of U.S. investment bank Lehman Brothers. The unusual bailout committed the government to absorb losses incurred by the company.

Elpida’s downfall was caused by a confluence of factors, including the heavy blow delivered to its bottom line by the yen’s sharp appreciation and a slump in global personal computer sales due partly to the sovereign debt crisis in Europe.

The fundamental cause of Elpida’s predicament, however, concerned structural challenges posed by competition from South Korean and Taiwanese rivals, led by Samsung Electronics Co., which have expanded their shares in the global DRAM market in recent years.

In the 1980s, Japanese makers controlled 70 percent of the world DRAM market.

But the competitive landscape changed dramatically while Japanese chip makers were hamstrung by the export restrictions imposed on them as a result of a semiconductor trade dispute between Japan and the United States.

Attaining leadership in the DRAM market requires continuing massive investments in technology and equipment.

South Korea’s Samsung has various other businesses that support its great financial strength. Elpida, which is dedicated to the DRAM business, apparently fought against hopeless odds when it challenged Samsung’s market leadership.

Of the 30 billion yen of taxpayer money injected into Elpida, up to 28 billion yen may prove to be unrecoverable, according to the Ministry of Economy, Trade and Industry.

For all its importance, the DRAM industry, unlike the financial and energy sectors, is not part of the social infrastructure that supports people’s everyday lives.

A direct injection of public funds into an ordinary private-sector company is regarded as unacceptable, except in very special cases.

The industry ministry should engage in serious soul-searching about its misguided and failed efforts to save Elpida, which also set the stage for an insider trading scandal that led to the indictment of a senior official at the ministry.

What is troubling is the fact that there are other cases of potentially excessive government involvement in private-sector business affairs.

In the liquid-crystal display industry, which, like the semiconductor industry, is facing a harsh business environment, Toshiba Corp., Sony Corp. and Hitachi have agreed to set up a new company to integrate their operations to manufacture small- and medium-sized LCDs.

The deal was struck under the leadership of the Innovation Network Corp. of Japan (INCJ), a government-backed investment fund set up to promote innovations. Most of the entity’s capital has been provided by the government, with the rest coming from private-sector companies.

The INCJ will acquire a 70-percent stake in the new LCD company by purchasing 200 billion yen worth of its shares.

While the market for small- and medium-sized LCDs is expected to grow, fierce price competition in the market means quick and flexible decision-making is essential for success. Will the government-led consolidation work?

During the era when Japan was pursuing a clear goal of catching up with Western industrial nations, the government was able to provide effective leadership for the growth of Japanese industries. But that era is long gone.

Now, the private sector should be left to tackle the challenge of creating and nurturing new growth industries by using its own intellectual and other resources.

The government’s role should be limited to supporting private-sector initiatives by improving the environment for corporate activities.


« srachai family photo current 10 | トップページ | 米朝核合意 ウラン濃縮停止を見極めたい »





« srachai family photo current 10 | トップページ | 米朝核合意 ウラン濃縮停止を見極めたい »