Toshiba outsources chip production to Samsung

Toshiba is set to significantly restructure its silicon chip manufacturing operations in 2011, outsourcing some production to Samsung and selling a manufacturing plant to Sony.

Toshiba Corp plans to reduces its non-memory chip exposure in an effort to claw back revenue, following an operating loss of $3.4 billion in its 2008 financial year, in the midst of the global financial crisis.

System chip design
Outsourcing to Samsung and others is part of the plan to cut capital investment outlays in the next financial year starting in April 2011.

"Thanks to this tie-up Toshiba will gain a stronger position," said Yumi Nishimura, a senior market analyst at Daiwa Securities Capital Markets.

"In a situation when bigger capacity is required, the burden of capital investment can be too big for one company, so the accord is a positive factor for Toshiba."

Toshiba has also announced that it will sell its system chip production line in Nagasaki to Sony. That line produces chips for Sony PlayStation 3s – and is located in a factory already owned by Sony.

Source: Reuters