Toshiba Corp plans to sell chipmaking facility to Sony Corp
TOKYO: Toshiba Corp., Japan's biggest chipmaker, plans to sell a semiconductor factory to Sony Corp. and outsource some output to bigger rival Samsung Electronics Co. as it tries to improve profitability at the chip business.
Sony will buy Toshiba's plant in Nagasaki, western Japan, which makes the Cell graphics chips used in PlayStation 3 video game consoles, the two companies said in a joint statement today, without disclosing financial details. Toshiba is also in talks to shift more production of its non-memory products to other chip manufacturers, including Samsung, said Hiroki Yamazaki, a spokesman for the Tokyo-based company.
Toshiba shares rose to the highest level in three weeks in Tokyo today. The company, which will shut a plant this month to phase out low-end chips, can cut costs and improve efficiency by selling the factory and teaming up with other manufacturers, said Takeo Miyamoto, a Tokyobased analyst at Deutsche Bank AG.
"It's about cutting expenses," he said in a phone interview. "The factory they're selling back to Sony, it wasn't profitable or efficient for them."
Toshiba's shares rose 0.7 percent to 441 yen at the 3 p.m. close of trading, the highest level since Dec. 6.
The company will continue to produce some system LSI chips, whose functions range from processing images for television screens to crunching data, it said.
Samsung, Asia's biggest maker of chips, will manufacture wafers for Toshiba using its 40-nanometer technology, the Suwon, South Korea-based company said in a statement today. Sales of products that Samsung manufactures for other companies may account for about 15 percent to 20 percent of its current system LSI semiconductor sales, Seo Won Seok, a Seoul-based analyst at NH Investment & Securities Co., said.
In June, Samsung said it will invest $3.6 billion to expand capacity at its 12-inch chip plant in Austin, Texas. The new facilities, which will be in full operation by late 2011, will be used to make LSI chips, Bill Cryer, a Samsung spokesman, said on June 9.
Toshiba's chip division broke even in 2009 after incurring a 280 billion yen ($3.4 billion) operating loss in the previous year. System LSI chips will account for 30 percent of the 1.2 trillion yen in sales Toshiba forecasts from its chip business this year, according to the company.
Toshiba also said today it will consolidate production of analog and imaging chips at its plant in Oita, on the southwestern island of Kyushu, and in Iwata, northern Japan.
Sony will buy back the Nagasaki facility for about 50 billion yen to double its monthly production capacity of the sensors, used in digital cameras and smartphones, to about 40,000 units, the Nikkei newspaper reported yesterday. Sony sold the plant in Nagasaki prefecture to Toshiba in 2008. In a separate news item, Nitto Denko Corp., maker of optical film for about a third of the world's LCD panels, will boost spending for the first time in five years as companies such as Sharp Corp. and Apple Inc. sell new tablet PCs and smartphones.
"Capital spending in equipment and facilities next fiscal year will be bigger than this year," President Yukio Nagira said in a Dec. 22 interview, declining to give a specific figure.
Investment related to factories and production equipment, down by about 50 percent from 2006, is the company's highest priority for using its cash, followed by dividend payouts, mergers and acquisitions, and stock buybacks, according to a document released in May. Nitto Denko spent about 75 billion yen ($903 million) on equipment and facilities in 2006, and plans to invest 36 billion yen this fiscal year.
Demand for touch panels used in smartphones, tablet computers and electronic book readers will grow "explosively," said Nagira, who has been president of the Osaka-based manufacturer since 2008.
Researcher ISuppli Corp. in a September report estimated shipments of e-readers will rise more than five-fold from last year to 26.5 million units by 2014. Apple between April and September this year sold 7.46 million units of its iPad, which also has e-reader functions, according to Bloomberg data. Nitto Denko said in July it would invest about 20 billion yen over two years to increase production capacity of optical films for liquid-crystal dis- plays. Nagira said the company will focus its investment on medical science, environmental technologies and new energy, including batteries, and is also considering acquisitions in these areas.
Nitto Denko hasn't made an acquisition since it bought Florida-based Elan Transdermal Technologies Inc., a maker of skin patches, for $45 million in 2003.
The shares have risen 17 percent this year, outperforming the 1 percent increase by its peers in the 119-member Topix Chemical Index. Nitto Denko traded 0.4 percent lower at 3,785 yen as of 9:22 a.m. on the Tokyo Stock Exchange. -Bloomberg