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Toshiba plans concentrated investment in advanced memory chips

TOKYO -- Toshiba will ramp up production of next-generation memory chips while paring back its hard drive business and selling other chipmaking operations, aiming for a speedy return to profitability after expensive post-scandal restructuring.

     The Japanese company plans by March to begin mass production of 3-D NAND flash memory, in which memory cells are stacked vertically to boost capacity. New production lines being built at fabrication facilities in Yokkaichi in Mie Prefecture are partially complete. Lithography and other equipment will be brought in gradually. Construction will be complete by June.

     Toshiba has entered talks with the local municipal government over neighboring land the company hopes to use to expand the facilities to house more lines. While it had considered building a new plant in Iwate Prefecture, it concluded that keeping everything in one place would be better, since trained engineers are more readily available, among other advantages.

     The new plant, to cost an estimated 400 billion yen to 500 billion yen ($3.37 billion to $4.21 billion), will be brought online by fiscal 2018. Toshiba will solidify its plans after talking with SanDisk, with which it operates the Yokkaichi facilities, about splitting the cost evenly.

     Flash memory competes with hard drives, a less promising market. Toshiba is considering layoffs at a hard drive factory in the Philippines. It plans to gradually scale down the division, which employs roughly 8,000, and could eventually bow out of the business entirely. It will switch over to production of solid-state drives, which use flash memory.

     The hard drive business is in a tough spot, and selling it is a possibility, President Masashi Muromachi told reporters on Dec. 21 -- suggesting that restructuring would be on the way soon.

     Toshiba has a nearly 20% share of the global hard drive market, likely logging around 400 billion yen in annual sales. While it is one of the top three, alongside Western Digital and Seagate Technology, sustained large-scale investment is required, and industry realignment has run its course. Selling the business would be difficult, since demand is lackluster due to such factors as flagging personal-computer sales.

     On the other hand, 3-D flash memory is expected to fare better amid rising demand for higher-capacity smartphones and data centers. Samsung Electronics is entering mass production as well.

     Toshiba has been investing around 200 billion yen a year on the memory business -- even during company-wide restructuring encompassing such areas as white goods and PCs -- and will likely continue to invest to remain competitive. It plans to use proceeds from the planned sale of Toshiba Medical Systems and non-memory chipmaking operations to fund this spending.

(Nikkei)

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