Toshiba To Halt Production Due to Weakening Demand
Toshiba Corp. will shutdown production for nine days at two of its plants due to weak demand, marking the company’s first production break in seven years, according to a report by Japanese broadcaster NHK on Friday.
However, Toshiba spokeswoman Hiroko Mochida denied the report, which said the company would temporarily suspend all operations at the factories in Yokkaichi and Oita, both in Japan.
The NKH report said Toshiba would halt output at the two plants between December 27 and January 4, the first semiconductor plant shutdown since 2001.  According to the report, the world’s No. 2 maker of NAND flash memory made the decision based on weakening demand for devices such as digital cameras, iPods and mobile phones that incorporate Toshiba’s flash memory.
The Yokkaichi factory, run jointly with production partner SanDisk, is Toshiba’s memory factory and has the capacity to make 290,000 300 millimeter-wafers each month. The Oita plant is Toshiba’s primary system chip production site, with the capacity to make 11,000 wafers a month.
Mochida said Toshiba is assessing its operating schedule for the remainder of the year, and was considering suspending some chip-making lines. However, she said such a move would not be rare.  Â
Shares of Toshiba’s stock were up nearly 3 percent following the NHK report.
On Wednesday, Toshiba announced it would accelerate restructuring to reduce costs at its loss-making chip operations amid faster-than-expected price declines and a slowing global economy.
Ikuo Matsuhashi, an analyst with Goldman Sachs, said the production break did not alter its forecast that Toshiba would make an operating profit of 70 billion yen ($759 million) or less in the year to March 2009. That number represents less than half of Toshiba’s profit estimate of 150 billion yen.
"Such a move should help prevent Toshiba’s inventories from increasing, but not enough to change our view on Toshiba," wrote Matsuhashi in his report to clients.
He said other companies will likely follow suit. Samsung Electronics and Hynix Semiconductor are among Panasonic’s competitors.
Declining demand and excess capacity have caused semiconductor prices to plummet, driving Toshiba’s chip business to a 59.5 billion yen ($645 million) operating loss for the April-September period.
Toshiba shares gained 2.7 percent to 307 yen by midday trading on Friday.
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