Elpida Memory's bankruptcy filing has brought concerns about whether Rexchip Electronics, a 64.7%-held subsidiary of Elpida dedicated to manufacturing DRAM memory, would be able to operate normally during the Japan-based firm's insolvency proceedings. Powerchip Technology, another major shareholder of Rexchip, has made its commitment to helping the affiliate carry on its business.
Speaking at a press event on February 29, Powerchip chairman Frank Huang said his company will offer Rexchip full support in regards to sales and operations. Elpida's talks with its creditors might have failed compelling it to declare bankruptcy at this time - which was unexpectedly early, Huang indicated.
Industry sources speculated previously that Elpida could end up bankrupt due to the failure to settle its debts due early April. But such worst-case scenario took place earlier than expected. However, the move is seen as a strategic one as Elpida is allowed to protect company assets and in the meantime, put Japan's government and society under public pressure, the sources observed. The latter factor could contribute to its restructuring efforts, the sources said.
Huang made the statement on the same day when Powerchip issued a filing with the Taiwan Stock Exchange (TSE) that the company sold part of its stakes in Rexchip to Powertech Technology (PTI) to offset some of the accounts payable it owed to the packaging and testing partner.
Rexchip was quoted as saying in previous reports that the company would not lower its utilization rate until the output cannot be sold due to Elpida's bankruptcy. And Rexchip would accept cash-on-delivery orders only to secure a steady cash flow, and work out a new sales model with the beleaguered firm.
Rexchip started shipping all of its output to Elpida in August 2011 as Powerchip moved to scale down its DRAM operation. Founded as a manufacturing joint venture between Elpida and Powerchip, Rexchip's current output amounts to 650,000 12-inch wafers monthly and its full capacity is 800,000 units per month.