Seemed like a good idea at the time. That's what memory chipmaker SanDisk Corp., which is cutting fab production, may be thinking as it looks back on its success in
thwarting a $5.85 billion Samsung Corp. takeover. SanDisk called the bid opportunistic as its share price was dragged down by general market turmoil and low demand for its NAND flash memory products that are used in cell phones and digital cameras.
South Korea's Samsung withdrew its offer, saying SanDisk's risk profile increased after it announced a quarter-billion-dollar operating loss, jobs cuts and a renegotiation of its relationship with Tokyo's Toshiba Corp. SanDisk said it was selling about 30% of the manufacturing capacity of the joint ventures to Toshiba for about $1 billion.
Now, both Milpitas, Calif.'s SanDisk and Toshiba are cutting production as global demand sinks. The two are also restructuring their deal on the manufacturing JVs and expect to sign agreements in the first quarter. SanDisk plans to
cut production at two plants in Japan for about two weeks, but may extend that time as a market turnaround looks bleak. Following this shutdown, JV production will resume at about 70% of current capacity.
It's anyone's guess as to how long the slimming strategy will last. At the time Toshiba and SanDisk announced the JV deal in October, FT.com quoted a Toshiba source: "It would give us more control over the venture, but I don't know if we would go through with this. The company needs to build new plants and buy new equipment to stay competitive." -
Baz HiralalSee the WSJ story
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