Toshiba to cut flash memory production by 30 percent

Summary:Toshiba will cut production of flash memory chips by 30 percent after it oversupplied components, amid an ongoing decrease in prices.

Toshiba said it will cut its flash production by 30 percent due to oversupplying the chips that are used in mobile devices and PCs.

The "adjustment to production" of NAND flash memory at its Mie Prefecture plant in Japan meant Toshiba will reduce output in a bid to reduce inventory. The move will aim to balance out supply and demand. 

"Oversupply of NAND flash memory in the retail market, for application in USB memories and memory cards, has resulted in continual price declines since the beginning of this year," the company said in a published statement. It came into effect today.

Toshiba remains the world's second largest maker of NAND flash memory after Samsung.

"Everyone knows that demand has not been as strong as expected," said Religare senior analyst David Motozo Rubenstein, speaking to Reuters.

Apple stands as Toshiba's biggest customer, analysts say, with more than half of Toshiba's memory chip output ending up in Apple's smartphones. With the impending launch of the iPhone 5 expected in or around October, "you would think they would build a little inventory for that," he added.

Toshiba believes the prices of NAND flash memory will improve in the current quarter -- July to September -- as the production of the next-generation smartphone ramps up. 

Earlier this year, an IHS report said NAND flash memory shipments will rise to 16.8 billion gigabytes by 2015, with the iPad accounting for more than three-quarters of all shipments in 2011.

Apple continues to dominate flash memory sales with its ever popular smartphone and tablet products, with 76 percent of all Apple's revenue driven from iOS device sales

Image credit: iFixit.

Topics: Toshiba, PCs, Web development

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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