Toshiba is slashing its production of flash memory chips by 30 percent.
The company has said that it has been caught by oversupply and falling prices. This even though its other Japanese rival Elpida filed for bankruptcy and its other enemy Renesas is trying to avoid a similar problem by cutting its workforce and closing half of its domestic plants.
Speaking to Reuters, Toshiba said that it will slash production at its Yokkaichi plant in western Japan due an oversupply of chips for USB drives and memory cards.
This is a serious cut which seems to have caught many analysts on the back foot. While everyone knew that demand was low, no one thought it would be that low.
Toshiba’s biggest customer is Apple and more than half of its NAND chip output ends up in the iPhone. It seems that with the iPhone 5 coming out later this year, Toshiba thinks that it will have enough chips stored in its warehouses. That means that it has a lot of chips backed up.
However it is more likely that the cuts will come in memory cards which are seeing really low global demand. There is a lot of product out there which has been caused by increased NAND production capacity which has been created beause everyone was predicting a top market for smartphones and tablets.
This market is suffering and is about as low as it can go, analysts have been muttering into their beer.
Toshiba said it expected market conditions to improve in the current July-September quarter.
Chip industry tracker DRAMeXchange said that NAND prices have fallen as much as 60 percent in the last year and are expected to fall by a further 35-40 percent.