Toshiba Expects Profit Dip, Gears for Upturn
Shoichi Saba, president of the giant Toshiba electronics firm, said Monday that the company will show a decline in net income for this fiscal year, partly because of a global slump in semiconductor sales, but that it will increase production capacity for its new 1-megabit chips to 1 million units a month by April.
Saba said that, in November, Toshiba became the first company in the world to begin mass production of 1-megabit dynamic random access memory chips. It was only a year ago that Toshiba and each of Japan’s three other giant chip makers--NEC, Hitachi and Fujitsu--achieved monthly production capacities of 1 million units a month for the 256-kilobit DRAM, which has only a quarter the storage capacity of the 1-megabit chip.
Tsuyoshi Kawanishi, Toshiba’s director for semiconductors, said the company’s sales of chips will fall by $575 million to $1.9 billion for the fiscal year. Saba, however, predicted that the global semiconductor industry will enjoy a “full-fledged recovery” this year and added: “We remain committed to a positive, forward-looking semiconductor policy.”
Production Recovered
And, according to Kawanishi, Toshiba’s chip production has already recovered to its pre-slump peak.
Of the plan to increase capacity for the new 1-megabit chip to 1 million units a month, Saba said: “We believe this represents not a shift to a new generation of memory devices but rather an additional option for customers, allowing them to choose either 256-kilobit DRAMs or 1-megabit DRAMs, depending on their particular needs.”
He predicted that mass production of the 1-megabit chip will spur development of new products.
When asked about American charges that Japanese firms are dumping chips at prices below cost in the U.S. market, Saba said a long-range solution to the problem will have to be found in more overseas manufacturing by Japanese firms and more joint ventures in semiconductor research and development with foreign firms. He denied that Toshiba, which built six new semiconductor factories in 1984, had overinvested in production capacity.
Saba pointed with pride to an agreement that Toshiba signed with Siemens, a West German firm, to provide Siemens with Toshiba’s memory technology for the 1-megabit chip and noted that the first firm to place an order for Toshiba’s 1-megabit chip was an American company. He did not identify the company by name.
The 67-year-old Saba, who will assume the post of chairman April 1, said Toshiba’s consolidated net sales will amount to about $16.5 billion in the fiscal year ending March 31, or nearly the same as for the previous year. Net income, however, is “likely to decline,” he added.
He blamed “the sudden recession in the world semiconductor industry,” a decline in export earnings caused by the rise in the value of the Japanese yen since last September and a slump in the sales of power plants. Appreciation of the yen, he added, will force Toshiba to raise its export prices to pass “some of the burden” of higher dollar-evaluated costs on to overseas customers.
Both Toshiba’s performance and Japan’s overall economy will be hurt by the stronger yen, he predicted. The Japanese government has forecast real growth of 4% in fiscal 1986, but Saba said he expects growth of only 3%.
He said that, by 1988, Toshiba plans to double its imports to about $700 million.
Toshiba, he said, will also begin production later this year of electron tubes for television sets and computer displays in a joint venture with Westinghouse in New York and start manufacturing telecommunications and medical electronics equipment in California.
