Toshiba, SanDisk to cut flash chip output

Toshiba plans to cut flash memory chip production starting in January, citing the global economic slowdown. SanDisk, which operates manufacturing lines jointly with Toshiba, said it will follow suit.

Toshiba announced on Monday that its Yokkaichi Operations plant in Japan's Mie prefecture will cut NAND flash memory production by approximately 30 percent, effective from January 2009.

"Recession in the global economy and the slowdown in consumer spending are having a significant impact on demand for semiconductors," Toshiba said in a statement. "This is particularly notable in NAND flash memories, where decreased demand for applications such as memory cards and MP3 players has generated excess supply."

The Yokkaichi facility has four fabs. Fab 3 and Fab 4 produce NAND flash memories on 300-millimeter wafers, Fab 1 and Fab 2 on 200mm wafers, Toshiba said. "Prior to the January production adjustment, the 300mm wafer lines will suspend operation for 13 days, and the 200mm wafer lines for four days, during the year-end and new-year period," the company said.

Milpitas, Calif.-based SanDisk, meanwhile, said it will halt production at the same joint-venture manufacturing facilities in Yokkaichi. "Production in Fab 3 and Fab 4 will be temporarily halted from December 31 to January 12. Following this shutdown, joint-venture production will resume at approximately 70 percent of current capacity," the company said in a statement.

"The duration and extent of this reduction in fab output will depend upon market conditions," SanDisk said.

SanDisk also said it is continuing to work with Toshiba on definitive agreements to restructure the manufacturing joint ventures and expects to sign these agreements in the first quarter of 2009. An agreement that covers selling a portion of the capacity from the joint ventures to Toshiba was originally announced on October 20.

SanDisk will provide additional details when it holds its fourth-quarter 2008 earnings conference call.

[Lerianis]

Read: Toshiba and SanDisk are decreasing flash chip output, in order to raise prices to their previous high point.
That is the REAL motive behind these decreases in output.