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Toshiba to slash NAND flash production by a third

by Mark Tyson on 25 July 2012, 13:30

Tags: Toshiba (TYO:6502), Samsung (005935.KS)

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Japanese electronics giant Toshiba Corporation has announced it will cut production of flash memory chips by around 30 per cent. The company says that the market has been oversupplied and the excess inventory has led to ever declining prices. A move by Toshiba could have a big impact, as the world’s number two supplier of NAND flash memory chips behind Samsung Electronics.

Analyst David Motozo Rubenstein at Religare Global Asset Management in Tokyo said to Reuters “I'm a little surprised that they're cutting that much. Everyone knows that demand has not been as strong as expected.” He added that “Apple is their biggest customer, with the new iPhone likely to come out later this year you would think they would build a little inventory for that”.

Initially Toshiba simply reduced shipments and built up inventory to lessen supply and try and drive prices up. However from yesterday the company has reduced factory output through slowing down the Yokkaichi factory operating rate. This will help stop the inventory build up so the supply reduction policy can be maintained.

The next half year is forecast to bring with it an increased demand for flash memory chips spurred by new PC, tablet and smartphone sales. HEXUS readers do not need to be reminded that there are several high profile computing/smart connected device launches due in autumn.

Toshiba NAND chips

Three weeks ago we had news that NAND prices were stabilising, according to a DigiTimes report. Looking at pricing charts, prices for SSDs do seem to be steadying in the last few weeks. It’s usually not in a company’s interest to run a production line slower than it can go, it can reduce the economies of large scale production and isn’t making the most of its investment in production machinery. So let’s hope that we shall have some more significant SSD price drops on larger capacity and more usefully sized SSDs later in the year. That’s after the NAND memory producers loosen the reins of production.

HEXUS Forums :: 3 Comments

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“Initially Toshiba simply reduced shipments and built up inventory to lessen supply and try and drive prices up”

Surely by driving up prices is going against the market requirements. They clearly have no idea that consumers are waiting for cheaper prices. R&D costs should now be covered which is usually one of the reasons behind high prices to begin with. I was expecting by now I'd have SSD in every computer.
NOW is the time to get your SSD or DDR3's.
I wonder how much margin they still get after this move. I wonder if they really really pushed how much cheaper they could go