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Toshiba, SanDisk Build Fab to Withstand Earthquakes

Toshiba and SanDisk on Tuesday announced the opening of a chip fabrication plant in Japan that was designed to withstand earthquakes.

The factory, which is in Yokkaichi, Mie Prefecture, will make chips such as NAND flash for devices like smartphones and tablets. Factory construction started last year, and the facility is being opened just a few months after a devastating earthquake and ensuing tsunami, which killed thousands and caused extensive damage to buildings and factories along Japan's eastern coast.

The manufacturing facility, which is called Fab 5, has "advanced earthquake-absorbing structures and integrates multiple power compensation techniques for protection against unexpected disruptions," the companies said in a joint statement. The multifloor facility has a steel and concrete frame.

Toshiba, like many other companies in Japan, suspended production at domestic factories following the earthquake due to structural damage, blackouts or the inability to get components to the supply chain. In May, Toshiba said the earthquake impacted the company's overall net sales as it continued recovery efforts.

The earthquake also had varying levels of effect on the supply of batteries, memory and other critical parts such PCBs (printed circuit boards), which are used in products including PCs, smartphones and digital watches. Companies are now reopening factories and accounting for employees as recovery continues in the aftermath of the natural disasters.

Research firm IHS iSuppli last week said that although the disaster had a minimal effect on the supply chain, raw materials for semiconductor wafers are a continued concern. Japan supplies around 60 percent of semiconductor wafers to chip makers globally.

The plant, which will manufacture chips using the 24-nanometer process, is part of a joint venture between Toshiba and SanDisk that was established last September and is called Flash Forward. Toshiba and SanDisk signed an agreement to construct the factory and the companies have worked together on flash memory in past years. Toshiba holds a 50.1 percent share in the joint venture and SanDisk holds the rest.

Toshiba already has manufacturing facilities in Yokkaichi, where it makes flash memory. Yokkaichi is about 330 miles (531 kilometers) away from Sendai, which is close to the earthquake's epicenter.

Toshiba and competitor Samsung build "megafabs" for NAND flash, and Fab 5 is a very advanced manufacturing facility, said Jim Handy, an analyst at Objective Analysis. The new fab should allow Toshiba and SanDisk to reduce manufacturing costs while cramming more bits into each chip, Handy said.

The reduced circuitry could also help produce more chips, which could lead to a price drop in NAND flash, Handy said. There is increasing demand for NAND flash because of smartphones and tablets, especially from Apple, which uses flash storage in iPhones and iPads.

By the middle of next year, NAND flash could sell at US$0.50 per gigabyte for MLC (multilevel cell) flash memory, which takes up a giant majority of the market, Handy said. The current pricing of MLC flash stands at around $0.90 per gigabyte.

Intel and Micron in April announced they were sampling NAND flash memory made using the 20-nanometer process. Toshiba was the third-largest semiconductor company in terms of revenue behind Intel and Samsung, according to iSuppli.

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