Oversupply and low prices to blame
Toshiba plans to cut flash memory production by 30 percent in response to oversupply and pricing issues.
On Tuesday Tosh announced that it will cut output at its Yokkaichi plant due to oversupply of NAND chips for USB sticks and memory cards, which resulted in tumbling prices.
Analysts are somewhat surprised by the size of the cut. Senior technology analyst at Religare, David Motozo, told Reuters that he is surprised by the scope of the cut, as everyone knew that demand has not been as strong as expected.
"Apple's their biggest customer, with the new iPhone likely to come out later this year you would think they would build a little inventory for that," he added.
However, although sales of NAND chips soldered in shiny new smartphones and tablets is going up, all flash makers are struggling in the memory card segment. Toshiba, Samsung, Micron and SanDisk have all been affected by the drop in memory card demand.
IHS iSuppli analyst Akira Minamikawa points out that memory card production accounts for a large portion of Toshiba’s NAND production.
“Market-wise, memory cards are suffering the most right now and the market is at rock bottom," he said.
NAND prices dropped by about 60 percent last year and DRAMeXchange estimates prices will fall by 35 to 40 percent this year.
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