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Toshiba’s NAND investment in line with expectation

May 16, 2014 08:47|May 16, 2014 08:47
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Japanese newspaper reports Toshiba capex of JPY700bn over 3 years
On May 12, Japan’s Sankei News reported that Toshiba will invest JPY700bn (USD6.8bn) for NAND Flash over the coming three years. Toshiba plans to spend on 1) new capacity at fab 5 phase 2 in Yokaichi and 2) upgrade existing production equipment (19Ynm, 15nm and low- 10nm tech migration). The company will also start mass-production of next-generation technology for 3D NAND.

Toshiba’s investment scale and pace meet previous forecast
Through a joint venture partnership, Toshiba and SanDisk have executed around USD2bn per annum as capex. As they would continue to invest going forward by spending JPY700bn (USD6.8bn) over three years, annual investment of mid-USD2.3bn is largely in line with our previous forecast. Especially, given 1) increased capex for new capacity (incl. 3D NAND) and 2) mid to low-10nm tech migration investment for existing capacity, the additional capacity increase should be limited to ~80,000 wpm.
NAND market will continue to grow driven by greater SSD demand and price
elasticity of demand As demand for SSD for servers and enterprises, as well as SSD for notebooks has quickly increased, total NAND demand has been picking up. Of note, as price elasticity of demand for NAND is very high, demand should swell driven by lower prices coming from greater supply. As a result, if NAND makers such as Samsung and Toshiba increase NAND supply through next-generation products and adding capacity, it will eventually create new demand.
As such, we believe the NAND market will continue to grow.
*Source: Korea Investment & Securities Co.