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Samsung and Toshiba putting brakes on SSD production

Industry sources reveal that Samsung and Toshiba are planning on slowing down the production of NAND flash until demand improves. So far, the demand for ultrabooks and SSDs have been disappointing in 2012

DigiTimes reports that Samsung Electronics and Toshiba are considering plans to slow down production on their most advanced NAND flash technologies until demand for solid state disks (SSDs) increases as per industry sources.

The sources said that Samsung's and Toshiba's transitions to 21nm and 19nm technology respectively have already boosted the production of NAND flash memory, but the demand is still lagging behind the production pace leading to an oversupply and price drops. In the wake of the turn of events, Samsung and Toshiba are both contemplating the possibility of postponing their scheduled 12-inch fab expansions as an effort to prevent further falls in chip prices.

Till now desktops and laptops have mostly been using mechanical hard disk drives (HDDs), while smaller devices like Smartphones have used flash-memory based SSDs. But with the introduction of thinner, lighter laptop designs like the MacBook Air and ultrabooks, SSDs are witnessing a significant rise in their usage. Apparently, the transition to SSDs isn't happening fast enough for Samsung and Toshiba. So far, the demand for ultrabooks and SSDs has been disappointing in 2012, which has resulted in a downward trend for chip prices.

As of June, prices for NAND flash chips showed some stability, as a result of Samsung's intentional reduction in its supply to China-based channel distributor's according to industry sources.

Samsung and Toshiba are two of the biggest NAND flash manufacturers and both have state of the art 12-inch fabs that produce NAND flash chips, but as long as there's a surcharge of supply, demand won't improve. So cutting down on the supply might be the only logical solution for both Samsung and Toshiba until demand improves. And by doing so they might turn in better profit margins.


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Pallab Jyotee Hazarika, 2012-07- 9 (Update: 2012-07- 9)