Japan's Toshiba Corp said it would cut its NAND flash memory production by 30% from January as the global economic slowdown hits demand for the chips used in digital cameras and portable music players.
Slumping demand and excess capacity have caused semiconductor prices to plunge, pushing Toshiba's chip business into the red in the first half of the business year.
“Toshiba's production cut is good news but that alone is not enough to lift NAND prices because overall market demand is so weak,” said Song Myung-sup, an analyst at HI Investment & Securities in Seoul.
“Inventories need to be cleared before a recovery and that won't happen without demand.”
Toshiba said it was unclear how long the output reduction at its flagship plant in Yokkaichi, western Japan, would remain in place. Prior to the January cuts, it will also halt chip output on its 300mm-wafer lines for 13 days from December 31.
“All we can say at the moment is that the production adjustment will probably continue after January. Market conditions are not likely to recover that easily,” Toshiba spokeswoman Hiroko Mochida said.
Toshiba is the world's No.2 NAND flash memory maker behind South Korea's Samsung Electronics Co Ltd. Its chip business posted a ¥59.5 billion ($657 million) operating loss for April-September.
Shares in Toshiba were up 0.6% at ¥329 by midday, outperforming the Tokyo stock market's electrical machinery index, which fell 1.9%. (Reuters)