Toshiba partner says chip production resumes

LONDON/SAN FRANCISCO: Toshiba's main facility producing flash memory used in tablets and smartphones has resumed production after the Japanese earthquake and chip prices could rise due to the setback and logistic problems.

Shares of memory maker Micron rose 1.41 percent and SanDisk, which partners with Toshiba to manufacture NAND flash memory, was flat as investors speculated chips prices could rise if global supplies are interrupted.

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Toshiba's main NAND facility in Yokkaichi, near Tokyo and down the coast from the epicenter of the quake, was not seriously affected by the quake, but briefly shut down production, SanDisk spokesman Mike Wong told Reuters.

"There was some loss of wafers, but operations have since resumed. They're currently operating and the overall impact still being assessed," he said.

Demand from Apple and other manufacturers for NAND memory, used in mobile gadgets to store songs, photos and other media, is already expected to rise this year.

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"If we look at Toshiba-SanDisk they manufacture roughly 45 percent of the world's wafers for flash memory. So we would expect NAND flash prices to increase on this," said Kevin Cassidy, an analyst at Stifel Nicolaus. "We think Japan is going to have logistic problems."

Underlying the sensitivity of high-tech manufacturing, in December a split-second power interruption at Toshiba's NAND facility threw off production and forced the company to warn that its output could be cut by 20 percent in the following two months.

Toshiba supplies more than a third of the NAND memory chips used worldwide in devices like Apple's iPad.

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Also due to the quake, Sony shut six factories, two in Fukushima and four in Miyagi, including a plant making laser diodes used in DVD, Blu-ray and CD ROM players and Playstations, and Panasonic halted production.

Analyst Mark Harding at Maxim Group in New York said the disaster would clearly have a negative impact on Sony, although it was too early to say what the extent would be.

"From the onset it's going to be marginally negative, and the longer it takes the worse it's going to be," he said.

However, the impact would be slightly mitigated because Sony had moved some manufacturing outside Japan and that the disruption had not come at a peak time.

"At this time it's typically the seasonally slower period in terms of consumer consumption," he said.