Toshiba kills HD DVD, looks to flash storage

19 Feb 2008

Tokyo-based electronics giant Toshiba has formally announced it will cease research and production of HD DVD equipment and will stop selling the products.

Toshiba has so far sold about one million units of HD DVD equipment worldwide, including players and recorders.

“We carefully assessed the long-term impact of continuing the so-called next-generation format war and concluded that a swift decision will best help the market develop,” said Toshiba president and chief executive, Atsutoshi Nishida. “It was a tough decision but it would have a big impact on our management if we continued the HD DVD business.”

The death knell for the HD DVD format was the decision by Time Warner to exclusively support Sony’s rival high-definition DVD format Blu-ray last month.

Toshiba will continue to provide full product support and after-sales service for all owners of Toshiba HD DVD products.

“The change in Warner Bros’ decision was a real bolt out of the blue. The impact was serious as US retailers reacted to this decision,” said Nishida.

Toshiba has also announced it will increase investment in NAND flash technology. It today announced it has signed a non-binding memorandum of understanding with SanDisk to form a new production joint venture and construct a new 300 millimetre (mm) wafer in Japan.

The two companies will now select the plant site and expect production to start in 2010.

Some 50pc of the new wafer fab’s production capacity will be allocated to the new joint venture. Within the joint venture, the parties will equally share wafer output and funding for the equipment. The remaining 50pc of the fab’s production capacity will be managed by Toshiba and half of the output will be provided to SanDisk on a committed foundry basis. This will allow SanDisk an option to convert its committed foundry capacity into the joint venture or to convert to a non-committed foundry arrangement.

“NAND flash memory is enjoying rapid growth and is expected to expand with new applications in coming years. Toshiba is committed to support such growth of NAND flash memory through continued proactive capital investments in production capacity and advanced process technology,” said Shozo Saito, corporate senior vice-president of Toshiba Corporation and president and CEO of Toshiba’s Semiconductor Company.

“The new wafer fab will build on the strong record of success we have achieved with SanDisk in flash memory product development and production, and further strengthen our partnership.”

However, the company said it still doesn’t know the impact that its decision to pull out of HD DVD activities will have on its earnings for this year.

“We are reviewing our earnings outlook for this fiscal year ending March and will release details once the review is determined,” the company said in a written statement.

By Niall Byrne