Toshiba closes older Flash memory plants

Toshiba is to close older Flash memory production lines that it jointly owns with US firm SanDisk.

The company is seeking ways to cut costs to remain competitive in the Flash memory market, analysts believe.

"Toshiba's semiconductor operation continues to face a harsh business climate amid falling prices," said Nomura Securities analyst Masaya Yamasaki.

"We think it has chosen to scale back 200mm line production in an effort to step up the strengthening of its cost competitiveness."

The market for Flash memory products has boomed on the popularity of products such as mobile phones and Apple's iPod series.

Future sales growth is also expected as Flash memory chips begin to replace hard disk drives in personal computers and other devices.

Toshiba owns 50.1 per cent of the eight year-old joint venture with SanDisk, which controls the remainder.

The shutdown will temporarily cut Toshiba's Flash chip production by seven per cent, Yamasaki estimated.

However, the lower capacities of the older products made on the 200mm line means that this will be only about three per cent of the total storage capacity of the company's Flash production.

Toshiba is already building two new Flash memory chip factories together with SanDisk.

The new factories will make chips on more cost-effective and technologically advanced 300mm wafers. The two companies are investing $16bn in this project, according to Toshiba.

Investors showed their approval of the planned plant closures by pushing Toshiba's stock price up well above the market average in Tokyo yesterday.