Toshiba Stops Making Chips Because of Cost Issues

It seems that, despite how the general economy seems to be recovering, the semiconductor market isn't doing very well, or at least Toshiba isn't doing very well on this segment is recent reports are anything to go by.

The past month has been quite well supplied with rumors and reports about how certain market segments are going or are about to go through trough times.

Netbooks are one of said segments, and a shipment decline of about 18% has been predicted for 2011.

The other market that, at least in Toshiba's case, isn't very friendly right now is that of semiconductors (chips).

The company has been manufacturing its own chips so far, but it is said that it now plans to sell its manufacturing plant to Sony Corp.

Basically, Toshiba is pulling out of the chip making business because further efforts aren't expected to pay off and the funds needed for them can be better used elsewhere.

As such, the outfit plans to outsource the chips supposed to be made on the 28nm or 40nm manufacturing processes.

This will allow it to save research and development costs, as well as remove the need to spend funds on high-end equipment.

Outsourcing to Globalfoundries is, thus, supposedly part of Toshiba's plans. In fact, the two are reportedly in the final stages of negotiation, or so said Doug Grose, chief executive officer of Globalfoundries.

"We had been considering outsourcing production to Samsung Electronics and GlobalFoundries since last year," said a spokesperson for Toshiba in an interview with Nikkei news-paper, reports Reuters news-agency.

Meanwhile, as Globalfoundries makes the advanced chips, Samsung may take up the manufacture of Toshiba's mainline image-processing models.

What remains to be seen is how Toshiba's business progresses and if any other chip makers decide to mirror its maneuver and pull out of this business sector.