Toshiba to outsource production of next-generation system chips

Japanese multinational conglomerate Toshiba Corporation said today that it may outsource production of some of its next-generation system chips in a bid to cut manufacturing costs.

In a filing with the Tokyo Stock Exchange today, Toshiba said, ''We are considering outsourcing any system LSI output that exceeds our production capacity, but nothing has been decided at the moment.''

Toshiba, which had planes to mass produce the 28-nanometre system chips, is seeking to outsource the production to an outside company as it does not want to make any additional investment although its two main plants at Oita and Nagasaki prefectures will continue to fabricate the state-of-the-art chips.

The 28-nanometre system chips is used in a wide range of devices like game consoles, flat-panel televisions and digital cameras among others.

However, the decision to outsource the manufacturing of the state-of-the-art chips would be against the company's plan of making everything in-house, from designing, fabricating and manufacturing these chips.

The world's No.2 maker of NAND flash memory chips used in smart phones and netbooks will be able to focus on its main product-the NAND flash memory chips as the company's system chips accounted for 40 per cent or about 1 trillion yen of its fiscal 2008 sales.

According to Japanese newspaper Nikkei, the word's third-largest chip maker is holding talks with Singapore's Chartered Semiconductor and Globalfoundries of the US to outsource production of its 28-nanometre system chips.

If the deal is bagged by Singapore's Chartered Semiconductor or by Globalfoundries, then it will be a big boost for the Emirate of Abu Dhabi owned Advanced Technology Investment Company, which owns 55.6 per cent of Globalfoundries and struck a deal yesterday to acquire the Singapore-based chipmaker for $1.8 billion. (See: Abu Dhabi's ATIC to acquire Singapore's Chartered Semi)