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Toshiba to Outsource System Chips to Rival Samsung

Will also sell semiconductor factory to Sony

To increase profitability as part of a wider restructuring plan, Toshiba said Dec. 23 that it will outsource the making of chips used in smartphones, televisions and driving systems to Samsung.

The firm also said it had reached a basic agreement to sell a semiconductor factory to Sony, which will reportedly use the facility to make sensors used in cameras and smartphones.

Starting next fiscal year, Toshiba, the world's third-largest semiconductor maker, will consign fabrication of high-performance system LSI (large scale integration) chips to Samsung Electronics, the number-two chip manufacturer. The tie-up will allow Toshiba to save on capital investment costs for plants and capacity upgrades.

The move to tie-up with Samsung should allow Toshiba to focus on its mainstay flash memory business, Cosmo Securities analyst Hiroyasu Nishikawa said. Toshiba had been making losses in system chips, he added. "It's a positive strategy to spin off this segment," Nishikawa said.

"But there are concerns about the risk of leakage in know-how and technology" by partnering with rival Samsung, he said.

Toshiba said separately it will sell back a semiconductor plant in Nagasaki prefecture to Sony, which owned the facility until 2008.

It declined to disclose the transaction value, reportedly estimated at 40-50 billion yen (US$500-600.)

Copyright Agence France-Presse, 2010

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