Toshiba, SanDisk to slash NAND production amid spending cuts

The world's CE products, especially portables, depend on flash memory. But even with demand continuing to grow, albeit less briskly than before, a global glut in NAND is forcing two of the world's top producers to cut production.

Amid warnings that the semiconductor industry as a whole could spend significantly less to retool and maintain their factories in 2009, two of the largest producers of flash memory said they will jointly take steps to make those capital expenditure cuts this month, beginning with a temporary shutdown of two of their biggest production facilities.

Fabs 3 and 4 at Yokkaichi, Japan, which produce NAND flash in 300 mm wafers for both SanDisk and Toshiba, will halt production on December 31. At the same time, their 200 mm production facilities -- Fabs 1 and 2 -- will reduce output to 70%. When production at Fabs 3 and 4 resumes on January 12, they too will be operating at only 70%. This news from statements from the two companies late yesterday and this morning.

Toshiba had just agreed to assume 65% control of the Yokkaichi facilities, in a move that may have prevented SanDisk from being swallowed by rival producer Samsung. But now, Toshiba may not be able to carry that much of the burden -- a fact which will be brought up during a new round of meetings between the two partners that SanDisk says will begin after January 12.

In a report last week, hardware analysis firm iSuppli warned that the world's semiconductor manufacturers were already cutting capital expenditures at record rates, turning what was shaping up to be a respectable growth year into one of rapid freefall in just its last quarter. The firm now projects global cap-ex among top producers to just eclipse $35 billion USD, a 60% decline from the industry's highs of $56.3 billion set in 2006.