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Significant losses generated in its semiconductor and TFT-LCD businesses have forced Toshiba Corporation to make sweeping restructuring plans as the global downturn and continued poor demand for its electronic products takes hold. The company expects to cut 4,500 jobs across enterprises, delay the construction of two previously announced 300mm fabs and reduce capital spending for FY2009 by 60% compared with 2008 in an effort to save approximately US$3.3 billion in operating costs.

In February 2008, Toshiba and SanDisk announced plans to build a new 300mm NAND flash memory fab adjacent to Toshiba’s Yokkaichi Operations, where four NAND flash fabs are currently operated. Toshiba would also construct a second 300mm fab on the site of Iwate Toshiba Electronics, Iwate, Japan. Both facilities were earmarked to start construction in March 2009. 

Toshiba has now said that both facilities will be delayed. The NAND flash fab will be postponed by approximately 12 months while the second fab will be postponed until memory markets have improved to the point that such a facility would be required. 

A reorganization of its discrete System LSI operations is also planned. Toshiba said that it will accelerate the use of overseas production facilities for power devices and opto-electronics products, rationalizing domestic production to lower operating costs. The company will also transfer system analog IC production from its Kitakyushu fab to its Oita operations. More of its back-end assembly requirements will also be transferred overseas. 

However, restructuring efforts could go further. Toshiba said that it would undertake a more comprehensive review of its semiconductor operations, which could include a complete spin-off of these operations. The company did not provide a timing for such plans.

Expenditure in both capital equipment and R&D are to be reduced significantly in FY2009. Toshiba said that it would cut R&D expenditures by more than 20% and CapEx by approximately 60% to approximately US$1.1 billion compared to FY2008.

CapEx will focus on scaling NAND flash process technology to sub-4x nodes to remain cost competitive. Previous plans to expand production at Fab 4 would seem to be delayed or slowed down in light of the CapEx cut.   

The workforce reduction targets contract workers specifically. Although 4,500 jobs will initially be lost, Toshiba said that approximately 500 of these workers will be rehired as Toshiba employees, mainly attributed to its power plant operations.