Toshiba Cuts NAND Flash Production by 30 Percent

Toshiba, which invented NAND flash back in the late 1980s, revealed July 24 that it is trimming its production of flash-memory chips for the first time in more than three years due to an overflow of inventory.

Sales overall in NAND flash chips have been sluggish for the better part of 2012, as evidenced in this recent IHS iSuppli market report. Product is piling up in Toshiba’s warehouses, as it is at chief competitor Samsung.

Wholesale pricing of NAND chips, specifically low-end products used for USB memory sticks and memory cards for digital cameras, has gone steeply downhill in the last 12 months, despite the continued sales of electronic devices with solid-state storage. The continued rise in the amount of personal and business data stored in cloud services is a likely factor affecting the slowdown of sales in memory sticks, desktop storage devices and cameras.

Toshiba’s Yokkaichi plant in Mie, Japan, cut its NAND flash production by 30 percent, the company said.

Toshiba, Samsung and Hynix had increased their solid-state drive (SSD) output in 2010 and 2011, projecting strong demand for smartphones, tablet PCs and lightweight notebook computers that use NAND chips in place of hard-disk drives.

Nonetheless, global demand for flash chips hasn’t matched the stored-up supply. The IT device industry suffered due to lower SSD prices in the first half of the year, when demand for electronics is normally down after the holiday shopping season, but it hasn’t recovered. Thus, wholesale prices of Toshiba’s NAND chips for memory cards and USB memory sticks fell more than 20 percent, Toshiba said.

Samsung is currently No. 1 in world SSD revenue with 37 percent market share; Toshiba is No. 2 at 34 percent, IHS iSuppli reported in June. Hynix and Micron are key smaller players.