Toshiba, SanDisk to build flash chip factory

"This demonstrates our optimism in the continuing growth in demand for our products in consumer electronics and handsets in the years ahead."

Eli Harari, SanDisk chief executive

Toshiba Corp, the world's second-biggest maker of flash memory chips, and SanDisk Corp are building a new memory-chip plant in Japan to meet a rapidly growing demand for the storage technology used in portable digital music players and mobile phones, the companies said yesterday.

Japanese maker Toshiba and California-based SanDisk, the world's largest supplier of flash memory data storage card products, plan to start construction of the new facility at Toshiba's Yokkaichi plant in central Japan, they said in a statement.

The two companies have had plants to produce NAND flash memory -- used in USB drives and memory cards for digital cameras -- at Yokkaichi since last year, and have boosted the facility's capacity to meet market demand. Yesterday's announcement reflects anticipated need for 2008 and beyond, they said.

"We will maintain leadership in the market through continued proactive capital investments," said Masashi Muromachi, Toshiba corporate senior vice president.

"This demonstrates our optimism in the continuing growth in demand for our products in consumer electronics and handsets in the years ahead, as well as our confidence in the continuing future competitiveness of the Toshiba-SanDisk partnership," SanDisk chief executive Eli Harari said.

Construction the new plant will begin in August, Toshiba said in a statement yesterday. The new facility, the fourth one at the location, will start production of the chips on 300-millimeter wafers by December 2007.

"Detailed investment plans will be decided at a later date," said Makoto Yasuda, a Toshiba spokesman. The new factory, called Fab 4, will probably be similar to the Fab 3 facility built before it, he said.

Toshiba makes 30,000 wafers a month at its Fab 3 factory and plans to expand the production to 70,000 wafers by October, Yasuda said. Toshiba and SanDisk had split investment in the third factory equally, he said, without giving further details.

Spot of NAND flash memory chips, which store data in electronics such as Apple Computer Inc's iPod Nano music players, probably won't sustain their rally, Taiwan-based Dramexchange.com (集邦科技) said.

Prices the chip have surged amid a temporary shortage of semiconductor components known as thin small outline packages, or TSOP, resulting in a "NAND shortage illusion," Dramexchange analyst Judy Chen wrote in a note to clients dated Tuesday.

"This false shortage illusion will not last over a week," Chen said in a weekly report. "We believe this is only a temporary mismatch of supply and demand."

Spot of the 2-gigabit NAND chip, which had fallen 69 percent during the first three months of the year, rose 8.6 percent on Tuesday after gaining a record 11 percent the previous day, according to Dramexchange, Asia's biggest chip spot market.

Samsung Electronics Co, Toshiba and Hynix Semiconductor Inc are the world's largest producers of NAND.