Toshiba, SanDisk to cut 30 per cent flash memory production

18 December 2008

Japan's Toshiba Corp and US partner SanDisk Corp will cut NAND flash memory production by 30 per cent from January, as the global economic slowdown hits demand for the microchips used in digital cameras and portable music players.

Slumping demand and excess capacity have caused semiconductor prices to plunge, pushing makers of PC-use DRAM chips in particular to seek help, and sending Toshiba's chip business into the red in the first half of the business year. Global recession and lesser consumer spending are ''particularly notable in NAND flash memories, where decreased demand for applications such as memory cards and MP3 music players has generated excess supply," Toshiba said in a statement.

Research firm Gartner forecast Tuesday a 4.4 per cent drop in world-wide semiconductor revenue for the year, based on a sudden drop in orders that it expects to trigger a 24.4 per cent plunge in revenue for the fourth quarter. In mid-November, the firm had projected industry revenue would grow 0.2 per cent this year.

A survey of 85 semiconductor executives by KPMG, scheduled for release Wednesday, reinforces the pattern. The firm, which provides accounting and advisory services to chip makers, says 52 per cent of those surveyed in November predicted revenue to fall in 2009.

Toshiba and SanDisk jointly operate two NAND plants that process cost-efficient 300-mm silicon wafers at a manufacturing complex in Yokkaichi, western Japan. The two plants have a combined capacity to handle 260,000 wafers a month. Two other factories in the complex process 200-mm wafers and are run by Toshiba alone.

Toshiba said it was unclear how long the output reduction would remain in place. Before the company cuts output in the New Year, two of the four fabrication plants producing the memory will halt operations for 13 days and the other two will stop for four days, Toshiba said.