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Aligning Strategies for 2012: A quick look at Toshiba's 'phase outs'

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This week Toshiba announced here that as part of its 2012 strategic plans, it will phase out production at three facilities in Japan, Kitakyushu Operations, Hamaoka Toshiba Electronics, and Toshiba Components, "which carry out front-end production of optical semiconductors [… and] an assembly facility for power semiconductors."

As Toshiba underscored, these phase outs are part of a reorganization strategy to strengthen their positions and improve profitability by shifting production to be more in line with changing market demands and architectures (namely the phase out of 150mm wafer lines to larger wafers with greater efficiencies and margins).  These phase outs are slated for 1H12; during 2H12 the three facilities Himeji Operations-Semiconductor, Kaga Toshiba Electronics, and Buzen Toshiba Electronics, all in Japan, will take on additional optical semiconductor production and increase their front-end processes.

 

The reasons for these phase outs and realignments of production within Toshiba's plants plus some increased outsourcing are also rooted in Toshiba's proactive strategies for addressing waning market demand for consumer electronics such as PCs and TVs, particularly in the US and Europe, as Toshiba cited here.  Additionally, the strength of the Japanese Yen has cut into profitability, a situation that goes beyond Toshiba and is affecting most of Japan's manufacturers.

"The yen, which reached a post-World War II record last month, has gained more than 9.6 percent in the past six months, the best performance among 10 developed-nation peers tracked by Bloomberg Correlation-Weighted Currency Indexes.   The currency's advance hurts the overseas competitiveness of Japanese manufacturers and reduces the value of repatriated earnings," as explained in this Bloomberg report on the Toshiba news.

Meanwhile, as Samsung continues its successful global and multi-sector growth strategies, Toshiba may find itself in a position to increase its supplier relationship with Apple.  According to this report from Bloomberg, with the rift widening between Samsung and Apple, Apple has been looking elsewhere for partners; Toshiba is one of those partners who will see an increase in NAND flash orders, while Sharp, also headquartered in Japan, looks to gain significantly from Apple's shift in display sourcing.


Lisa Ann Cairns, Ph.D.
Written on Friday, 02 December 2011 12:54 by Lisa Ann Cairns, Ph.D.

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