Power glitch hits Toshiba's flash memory production line

A momentary voltage drop halted production, but it shouldn't keep chip prices from dropping in 2011, analysts say

Toshiba could lose up to a fifth of the NAND flash memory chips it was making for delivery early next year, after a momentary power glitch caused its production line to halt. But the problem shouldn't have a long-term effect on chip prices, which could drop by more than half in 2011, according to analyst data.

The glitch occurred on Wednesday morning at 5:21 a.m., when problems bringing a substation online at a thermal-electric power plant caused a drop in supply voltage for 0.07 seconds, said substation-operator Chubu Electric Power.

The drop, while brief, was enough to cause major problems for Toshiba because its back-up power-supply didn't kick in. As a result, machines on the company's NAND memory chip production line in Yokkaichi, central Japan, stopped working.

Because of the highly integrated nature of a chip production line, where each machine works at a precise pace so the entire line is in harmony, a fault in even one machine is enough to bring production to a halt.

"Once the line is stopped, we can't just resume production," said Toshiba spokesman Hiroko Yamazaki.

The company is checking the chips and wafers that were at various stages of production when the outage occurred, he said, and some or all of those might have to be scrapped.

"The worst case is 20 per cent of our shipments for January and February," Yamazaki said.

Toshiba has resumed production and hopes to reach full capacity Friday evening.

The impact on chip prices won't be big, said semiconductor market research company Objective Analysis.

Current oversupply in the market might be turned to a small undersupply early next year, and there could be moderate price moves of around 10 per cent from the current per-gigabyte price of around $US1.30, the company said.

"Objective Analysis finds it likely that prices will trend upwards for the next month or two before recommencing their current gradual decline," it said in a statement. It also said that reports of a knock-on effect on production of Apple's iPad, iPhone and iPods is unlikely.

For the remainder of 2011, Objective Analysis forecasts a significant drop in the price of flash memory.

"Our forecast calls for an oversupply to begin in earnest in the second half of 2011," it said. "By the end of next year prices should have reached cost, or about $0.50 per gigabyte."

Martyn Williams covers Japan and general technology breaking news for The IDG News Service. Follow Martyn on Twitter at @martyn_williams. Martyn's e-mail address is martyn_williams@idg.com

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