SanDisk is Evaluating Production Halt in Japan

SanDisk Corporation (SNDK) is considering according to CNet, a production halt over the holidays at its manufacturing facilities in Japan.

“The joint venture is evaluating plans for operations over the holiday season, including a possible stoppage of some production lines,” a SanDisk spokesman said Friday. “We constantly consider manufacturing schedules in light of market requirements and this is particularly true during the holiday season,” he added.

The news isn’t surprising at a time when the chip industry faces contracting sales in the double-digits. According to iSuppli the industry will see its sales fall by nearly 11% in Q4’08/year-over-year basis. The market research firm also expects chip revenues for fiscal ’08 to drop for the first time in seven years.

Sandisk’s announcement follows Toshiba’s. The world’s No. 2 maker of NAND flash memory said it is considering to halt chip production at two plants for nine days due to slow demand and weak economic environment. Last Wednesday Toshiba also said that it would speed up restructuring to cut costs at its loss-making chip operations. Toshiba has forecast its lowest annual profit in four years.

Deteriorating demand and excess capacity have caused semiconductor prices to plunge. According to Bloomberg, the benchmark prices on NAND flash memory chip have plummeted 70% this year. Toshiba’s chip business experienced a $645 million operating loss for the April-September period.

Toshiba and SanDisk have a 36% share of the global NAND flash market, according to a JPMorgan (JPM) report dated Nov. 21. Samsung is the leader with 43% of the overall market share.

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About Ron Haruni 1068 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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