Toshiba to consolidate NAND memory production

The world's number two flash maker wants to make its operations more efficient

Toshiba will consolidate its flash memory operations in Japan this year as it seeks to improve production efficiency, it said Wednesday.

The world's number-two maker of flash memory will shift chip-packaging operations currently carried out in Fukuoka, west Japan, to its chip factory in Yokkaichi, central Japan. A portion of Toshiba's packaging is already handled at Yokkaichi so the move, which is scheduled to take place in November, will bring all of Toshiba's domestic flash memory production and packaging together at a single site.

Flash memory is the type of memory commonly found in digital cameras, music players and inside memory cards. It has the ability to retain data even when no power is being supplied and the market for flash chips is incredibly competitive and price cyclical.

By consolidating its operations Toshiba said it will be able to improve coordination and cooperation within its flash operations and improve efficiency of chip development and trial production of new chips.

Most workers affected by the change will be offered positions in Yokkaichi so Toshiba does not expect and significant job losses from the move, said Hiroki Yamazaki, a Toshiba spokesman in Tokyo.

In parallel with the reorganization of its domestic flash operations, Toshiba plans to increase its reliance on third-party chip packagers outside of Japan. At present roughly 70 percent of Toshiba's flash memory chips are sent overseas for packaging, but Toshiba plans to increase this to 80 percent by March 2011.

Toshiba's memory-chip business returned a profit in the nine months to December, reversing losses seen a year earlier as cost reductions and price stability in the flash markets helped significantly improve results, it said last week.

Overall Toshiba's electronic devices division, which includes its flash memory operations, saw sales slide 12 percent in the nine months to December and operating losses of ¥46 billion (US$509 million).

The better results from the flash memory business led Toshiba to halve its loss forecast for the electronic devices division for the current fiscal year. It now expects the division to lose ¥30 billion in the year to the end of March. Overall Toshiba expects to record a profit of ¥100 billion for the same period.

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