Toshiba to close chip plants as demand slides

Toshiba Corp said on Wednesday it would close three of its six discrete chip-making facilities in Japan and also trim output of certain types of chips over the year-end as demand for PCs and TVs slides in Europe and the United States. Discrete chips are relatively simple semiconductors used in a wide range of electronic products from audio-visual equipment to cars and mobile phones. The three plants are scheduled to be closed in the first half of the fiscal year starting in April 2012, in a bid to slash costs, with Japanese makers at a disadvantage because of strength in the yen.

The "chips" are down

"It's because demand is so weak," said analyst Yoshiharu Izumi at JP Morgan in Tokyo, adding that the announcement would likely be mildly negative for the company's stock. "There is the high yen, cutbacks by domestic setmakers, especially Sony and Panasonic, and PC sales are weak around the world." He said that Toshiba relied heavily on struggling Finnish maker Nokia for sales of its mobile phone chips. Toyota said in a statement it will temporarily halt production of analog chips and image sensors at its Oita plant, discrete chips at its Himeji plant, and photonic chips at its Kita Kyushu plant -- all in western Japan -- from the end of December to the beginning of January. Cut-backs to production rates will start in late November, the company said. Shares in Toshiba fell just over 1.1 percent to 347 yen on Wednesday, underperforming the Nikkei average.

Reuters