December 9, 2010 / 11:17 AM / 7 years ago

Toshiba says chip plant halted by power outage

TOKYO (Reuters) - Production at one of Toshiba Corp’s key chip factories has been halted by a brief cut in power, the company said, hitting its output of NAND flash memory and likely helping rivals such as South Korea’s Samsung Electronics.

Shipments of NAND from the central Japan plant, in demand for items like smartphones and tablet PCs, could be cut by up to 20 percent in January and February, even with the factory due to resume normal operations on Friday, a Toshiba spokesman said on Thursday.

Toshiba, the world’s No. 2 NAND chipmaker after Samsung produces all its NAND memory at the Yokkaichi facility.

The Toshiba spokesman declined to comment on the extent of the likely effect on chip business operating profits, which the company said in September were on track to hit 100 billion yen ($1.2 billion) for the year to next March.

Analyst Yuichi Ishida of Mizuho Investors Securities said production problems at Toshiba could benefit rivals including Samsung. Shares in Samsung rose 3.3 percent to 917,000 won on Thursday.

“I think the market will become slightly tighter on this,” Ishida said. “Demand is strong with sales of tablet PCs growing, although it tends to fade after the year-end rush,” he added.

Chubu Electric Power Co said on Wednesday there had been a fall in voltage in its power supply in the area, but the cause was not immediately clear.

“Once things calm down I think there may be talk about compensation,” said analyst Ishida. Toshiba declined to comment on whether it would be seeking compensation.

Japanese refiner Cosmo Oil Co said on Wednesday it had stopped operations at its refinery in Yokkaichi due to the outage. One crude distillation unit will be re-started this weekend and the remaining refining units next week.

Shares in Toshiba dropped 1.6 percent to 430 yen on Thursday, while the Nikkei average climbed 0.5 percent.

Editing by Joseph Radford

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