Toshiba and U.S. partner Western Digital will commit 1.5 trillion yen ($14.6 billion) over three years toward stepping up flash memory production at their jointly run Japanese plant, in a bid to widen global market share.

Western Digital inherited the operational tie-up at the Yokkaichi plant in Mie Prefecture when the hard-disk producer took over American rival SanDisk in May. The site in central Japan will receive a new fabrication facility, with new equipment to be installed in the existing production space. This round of capital spending over three years is about 30% more than previous comparable periods.

This past spring, the plant started mass-producing 3-D flash memory chips, which boost capacity by eight times or more. The chips pave the way for increased miniaturization and energy efficiency of smartphones, storage devices and other digital equipment.

The plan is to boost 3-D memory production, with such chips accounting for 50% of the segment in fiscal 2017 and exceeding 80% in fiscal 2018.

South Korea's Samsung Electronics, the world leader in NAND flash memory, made 14.7 trillion won ($12.8 billion) in capital expenditures during 2015 on semiconductors, including DRAM and system chips. So the scale of the Toshiba camp's spending is on par with competitors. Three-dimensional memory requires massive capital investment in processes for creating circuits on silicon wafers and specialized equipment for stacking dozens of layers of memory cells.

Across all its segments, Toshiba has already disclosed capital outlays of 860 billion yen in the three years up to fiscal 2018. It is positioning semiconductors as one of its three core businesses. The Japanese company aims to become the No. 2 flash memory producer worldwide, said President Satoshi Tsunakawa.

Western Digital will match Toshiba's expenditures in the segment over that three-year period. The two companies will likely spend approximately 1.5 trillion yen on the Yokkaichi plant, of which Toshiba possesses the land and the buildings. The time frame for the spending will be adjusted in tune with market conditions.

The sharing of cost burdens will raise investment efficiency. Yokkaichi's flash memory production capacity will be roughly double that of Samsung's flagship plant. In addition, plants operated by Samsung and the American joint venture of Intel and Micron Technology are dispersed across several locations. Toshiba and Western Digital aim to compete against top rival Samsung by concentrating resources at one site.

Toshiba has been running the Yokkaichi plant jointly with SanDisk since 2002. Western Digital is the world leader in hard-disk drives. However, personal computers and data centers are quickly switching from hard disks to solid-state drives. Western Digital will sell both hard drives and solid-state drives using flash memory while reorganizing its operational structure to reflect current trends. Demand for flash memory is forecast to become six times bigger in 2020 compared with 2015 based on data storage capacity.

By: DocMemory
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