TOKYO, April 13 (Reuters) - Japan's Toshiba Corp (Tokyo:6502.T - News) said on Tuesday it had raised the planned investment in its new flash memory plant by 35 percent to 270 billion yen ($2.56 billion) to meet growing demand for rewriteable memory chips.
The NAND-type flash memory market, dominated by Toshiba, the world's fifth-largest chip maker, and South Korea's Samsung Electronics Co Ltd (KSE:005930.KS - News), is seeing explosive growth due to demand for digital cameras and photo-snapping mobile phones.
Of the total spending, investment in chip-making equipment, estimated at 230 billion yen, will be shared equally by Toshiba and SanDisk Corp (NasdaqNM:SNDK - News) of the United States.
SanDisk makes digital memory for devices such as cameras and other portable electronic products.
Market watchers said Toshiba had no choice but to step up its investment to remain competitive in the increasingly crowded NAND flash market.
"Sticking to the previous plan would only have meant losing market share to Samsung and others," ING analyst Yoshihiro Shimada said.
Strong growth in NAND flash memory, which does not require power in order to retain information and is used in removable memory for easy printing and downloading, lured in such new entrants as South Korea's Hynix Semiconductor Inc (KSE:000660.KS - News) and Germany's Infineon Technologies AG (XETRA:IFXGn.DE - News).
Investors welcomed the announcement and sent Toshiba shares to a nine-month high.
The shares rose as high as 523 yen, a level not seen since July 9, 2003, before closing up 3.17 percent at 520 yen, outperforming the Tokyo stock market's electric machinery index (^IELEC.T - News), which rose 0.24 percent.
WAVE OF CHIP INVESTMENTS
Toshiba's announcement is the latest in a series of capacity expansion unveiled by Japanese chip makers, which have been recovering from a record market downturn in 2001 and 2002.
Fujitsu Ltd (Tokyo:6702.T - News) has said it would spend 160 billion yen to build a chip plant that uses cutting-edge 300-mm wafers and NEC Electronics Corp (Tokyo:6723.T - News) plans to spend five billion yen to construct a factory building to prepare for future expansion.
The Toshiba plant, which will also use 300-mm wafers, is being built in central Japan and is slated to start volume production in the second half of the business year that starts next April. Initial output will be 10,000 wafers a month.
A 300-mm wafer yields more than twice as many chips per wafer as the standard 200-mm variety.
Output at the new plant is scheduled to hit its maximum capacity of 37,500 wafers a month by the first half of the business year starting in April 2007.
For further possible expansion, the factory has room to house additional production equipment that could boost its total monthly output capacity to 62,500 wafers.
Toshiba, Japan's second-largest electronics conglomerate behind Hitachi Ltd (Tokyo:6501.T - News), expects the global NAND-type flash memory market to grow by 79 percent to 680 billion yen in 2005 from 380 billion yen in 2003.
"The 270 billion yen is what it takes to satisfy robust and growing demand," a Toshiba spokesman said.
The announcement comes on the heels of Toshiba's new business plan aimed at doubling operating profit over the next three years.
Unveiling a three-year business strategy, Toshiba said last Friday that half of its planned capital spending of one trillion yen over the next three years would go towards semiconductors and displays. ($1=105.49 yen) |
