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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Math Junkie who wrote (27962)	2/2/1999 5:48:00 AM
From: Duker	Read Replies (2) \| Respond to of 70976

Toshiba to Boost Outsourcing Of Chip Production to 40% Dow Jones Newswires [This really is in sync with Bagley's (of LRCX fame for you AMAT-only threaders) comments on the strength he predicts from Taiwan ... obviously, this is more than a one company trend ... but, I thought this specific article would be of interest ...] --Duker TOKYO -- Toshiba Corp. said Tuesday it plans to outsource much more of its chip production over the next several years, in the latest case of restructuring by a Japanese semiconductor manufacturer. In the fiscal year starting April 2001, Toshiba, one of Japan's "Big Five" semiconductor makers, plans to have 40% of its total semiconductor production value come from outsourcing, compared with 10% expected this fiscal year, the company said. Toshiba forecasts total group semiconductor production value at one trillion yen ($8.7 billion) in fiscal 2001, up from 800 billion yen this business year. Toshiba said outsourcing, or consignment of production to other companies, will be increased for dynamic random access memory chips. This is expected to help the company save money in areas such as capital investment. It didn't say exactly which DRAM chips would be outsourced. "Outsourcing is a means to secure flexible production capability. It reduces the need for fixed assets in Japan and capital spending," said Toshiba spokesman Keisuke Ohmori. The firm will outsource an estimated 400 billion yen worth of production, Japanese newspaper Nihon Keizai Shimbun reported. Most Japanese chip makers produce almost all of their chips at their own plants, outsourcing an average of 5% of production to foreign firms. The increase in production outsourcing was expected to help Toshiba save 20%-30% on capital investment necessary to increase production. Toshiba already outsources semiconductor production to Taiwanese firms Winbond Electronics and Worldwide Semiconductor Manufacturing, Singapore's Chartered Semiconductor Manufacturing and Dominion Semiconductor, a joint venture between Toshiba and International Business Machines. Toshiba said it plans to boost outsourcing to these companies under the current plan. Winbond will produce 128-megabit memory chips for Toshiba starting this summer. Toshiba has been struggling in the semiconductor business as DRAM prices have plunged in recent years because of global overcapacity . In the first half of the current business year, Toshiba had a loss of more than 20 billion yen on its group semiconductor operations, and it expects to have a loss for the full fiscal year as well, even though the company hopes to be in the black in the second half of the current year, Mr. Ohmori said. DRAM prices have been more stable in recent months, but there is uncertainty about whether that trend will continue. In the first half of its fiscal year ending last Sept. 30, Toshiba said sales declined in its four main business areas: Information and communication system sales dropped 11%. Electronic device and materials sales fell 14%, hurt by "severe price erosion" for 64-megabit DRAMs, color display tubes and LCDS. Consumer product division sales dipped 6%. Power and industrial system sales fell 16%, hit by lower capital spending by power utilities in Japan and the Asian economic crisis. Toshiba first indicated it would step up outsourcing last year. Other measures to increase production and cut costs include renovating its manufacturing "clean rooms," in which the air is filtered to remove contaminants, extending their life to 15 years from the current nine years.