Toshiba, SanDisk to cut NAND output 30%

Toshiba and SanDisk both announced they will adjust the production rate of their NAND flash memory plants, due to a struggling global economy that’s forcing consumers to purchase less electronics.

Toshiba will reduce its current NAND flash output by as much as 30 percent, starting in January 2009, according to the company.

"Recession in the global economy and the slowdown in consumer spending are having a significant impact on demand for semiconductors," the company said in a statement.  "This is particularly notable in NAND flash memories, where decreased demand for applications such as memory cards and MP3 players has generated excess supply.

Toshiba and SanDisk share two NAND manufacturing plants that create 300-millimeter silicon wavers in Japan.  While Toshiba will reduce production, SanDisk plans to temporarily halt production at the joint manufacturing plants from Dec. 31 until Jan. 12.  According to the company, once the shutdown is over, SanDisk will continue at 70 percent of today’s capacity.

Despite the fact that NAND flash memory rose 123 percent in overall shipments, the price of the memory still fell 41 percent in October.  Toshiba halting production could help reduce the amount of oversupply, but it’s not likely to help recoup losses suffered, according to analysts who follow the NAND flash market.

Toshiba CEO Atsutoshi Nishida told reporters earlier in the year that he expected NAND prices to drop in half in 2009.

Toshiba remains the No. 2 NAND flash memory producer, trailing only Samsung.  Toshiba’s move may lead to Samsung and other companies with heavy reliance on NAND flash to also reduce output due to the struggling economy. 

Samsung released a statement saying it doesn’t have any immediate plans to slash NAND chip output at the moment, but we’ll see what happens later down the road.