Toshiba to close chip plant and outsource production
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Toshiba, the world's second largest maker of flash memory chips, is to shut one its oldest plants and outsource some semiconductor production. In a bid to boost profitability, the company has announced it will shut its No 2 plant in Yokkaichi, Japan, by the end of next month. It will also phase out low end chips used in products such as memory sticks.
Kiyoshi Kobayashi, president of the semiconductor division, said Toshiba is 'barely breaking even' and will start outsourcing production of logic chips next year to cut costs.
Kobayashi said the measures are part of Toshiba's efforts to focus on its main business of making chips that save photos and songs in smartphones including Apple's iPhone. "Flash demand in 2011 looks rock solid," he said. "The challenge is in how to get a high margin product mix."
According to the Kobayashi, about 1000 employees who work at the No 2 plant will be transferred to facilities in the same manufacturing site, including a facility under construction and set to open in the summer. The Yokkaichi factory, which processes 8in silicon wafers, was opened in 1996, when Toshiba was still producing memory chips for PCs.
The company had planned internally to shut the factory by the end of June 2011, but Kobayashi has decided to bring the date forward to the end of December.
Toshiba will outsource the production of next generation system LSI chips, by as early as next fiscal year. System LSI chips' functions range from processing images for television screens to processing data and will account for 30% of the 1.2trillion yen in sales Toshiba forecasts from its chip business this year, according to the company.
