Toshiba announces closure of three chip plants in Japan

Toshiba announced plans to close three domestic semiconductor plants by September 2012 in reaction to a stronger Yen and global recession.
Written by Hana Stewart-Smith, Contributor

Toshiba announced today the planned closure of three domestic semi-conductor chip plants in Japan, to benefit from the stronger Yen and "reinforce the operating structure and profitability of the discreet, analogue and imaging IC businesses".

Toshiba plans to consolidate all of their single-function chip production into three of their existing plants by the end of September 2012. The company said that 1,700 workers will be relocated, with 70 percent of that being moved to group companies.

Spokesmen Keisuke Ohmori said in a statement: "This latest measure will secure asset reduction through concentration of production facilities."

Toshiba, which currently has six plants in operation, had falling profits in the months following the March earthquake. They announced a net profit loss of 18.5 percent last month.

The Yen is enjoying record highs this month, gaining more than 9.6 percent in the last month. But this is bad news for companies like Toshiba as it continues to hurt its overseas competitiveness, and reduces the value of repatriate earnings.

At the close of trading today Toshiba fell 1.1 to 347 Yen in Tokyo.

Toshiba also announced that they will be halving the output of 150-millimeter wafer chips in an attempt to boost efficiency. To handle weakened demand for consumer electronics in a weakened global economy, output will be cut at two of the plants and the Oita system LSI plant throughout early January.

The company is anticipating a drop-off in demand for consumer electronic goods in the West, and in the face of a global recession, is attempting to streamline their operation to improve cost effectiveness.

In a press release on Toshiba's website, the company added that they will be monitoring the market over the next months to make further decisions about its operations and production levels next year.

This comes after news on Monday that Toshiba will be exporting auxiliary systems for four planned nuclear reactors to the United States by the end of the year.


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