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Toshiba shuts down three chip factories

Cuts production as economic slowdown bites

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Toshiba has announced it is closing three of its six chip factories in Japan and focusing on certain semiconductors over others, in order to cut costs in the face of falling demand.

The Japanese firm said it is going to phase out production at three chip facilities during the fiscal first half of next year "to strengthen cost competitiveness and focus on higher value added products".

Toshiba will concentrate on discrete semiconductor production at its remaining three facilities, although all of these will also be taking a little break between the end of November and early January next year.

"Toshiba is responding to the current economic slowdown and fall in demand for consumer products, most notably for PCs and TVs in Europe and the United States, by cutting production at some of its semiconductor facilities," the firm said in a canned statement.

"Temporary reductions in working and operating hours will give Toshiba the flexibility it needs to respond to the fall-off in demand for consumer products. The company will monitor the market and demand to make optimum decisions on its operations and production levels after the turn of the year," it added.

The slowdown in demand for consumer electronics has dampened the need for semiconductors as well, and Japanese companies have the added burden of a rising yen making them less competitive with their other Asian rivals.

In July, bean-counter IDC forecast that semiconductor revenues would only grow five per cent year over year in 2012.

"Continued macroeconomic problems, such as persistent high unemployment with the associated low consumer sentiment in the US, the ongoing sovereign debt crisis, especially in Europe and US, fear of recession in US and Japan in 2012, and fear of high inflation in China, India, and Brazil, will likely impact semiconductor market negatively in 2012," the analyst firm said.

However, IDC also said that the market for the chips used in smartphones and tablets remained strong. ®

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