Dec. 5 (Bloomberg) -- Toshiba Corp., the second-largest producer in the $12 billion NAND flash-memory market, denied a report it plans a complete halt of production of the chips during the holiday period.

“We are considering a partial stoppage, but there is no plan to completely halt” output, Toshiba’s spokeswoman Kaori Hiraki said by telephone today.

Toshiba will “completely” suspend production at chip plants in Japan’s central Mie prefecture and southwestern Oita prefecture for nine days starting Dec. 27, public broadcaster NHK reported on its Web site today, without saying where it obtained the information.

The Tokyo-based company operates its Yokkaichi flash facilities jointly with SanDisk Corp., its production and technology partner. Toshiba’s Oita facilities make chips for flat-panel televisions and Sony Corp.’s PlayStation 3 game consoles.

Toshiba forecasts its lowest annual profit in four years as global economic recession damps demand for flash chips used in products such as Apple Inc.’s iPod music players and system LSI devices used in flat-panel televisions and game consoles. The company’s Yokkaichi factories supply about one third of the world’s flash memory, according to JPMorgan Chase & Co.

Toshiba in September forecast its chip business will report a 65 billion yen ($703 million) loss this year, after an 89 billion yen profit a year earlier, as sales decline 8 percent to 1.28 trillion yen. Total net income will probably tumble 45 percent to 70 billion yen in the 12 months ending March 31, it said at the time.

Price Slump

Prices of the benchmark NAND flash memory chip have fallen 70 percent this year after plummeting 63 percent in 2007, according to Taipei-based DRAMexchange Technology Inc., operator of Asia’s biggest spot market for chips.

Toshiba and Milpitas, California-based SanDisk together had a 36 percent share of the global NAND flash market in the quarter ended Sept. 30, compared with 43 percent by market leader Samsung Electronics Co., according to a JPMorgan report dated Nov. 21. Micron Technology Inc., which produces flash in a joint venture with Intel Corp., and Hynix Semiconductor Inc. shared third place with 10 percent.

Closely held Renesas Technology Corp., Japan’s third-largest chipmaker, may extend its holiday output halt to as much as two weeks from 8 to 10 days planned originally, spokesman Hirotaka Ohno said today.

NEC Electronics Corp., Japan’s fourth-largest chipmaker, is considering stopping semiconductor operations for as much as 13 days over the New Year period, longer than last year because of weaker demand, spokesman Hisashi Saito said, without specifying the duration of the halt a year earlier. The company, based in Kawasaki, a suburb of Tokyo, makes chips for automobiles, flat- panel displays and mobile phones.

Fujitsu Ltd., a Japanese maker of chips for servers, mobile phones and flat-panel TVs, may halt factory operations longer than last year, spokesman Toshiyuki Fukuoka, without giving further details.

Toshiba gained 2.7 percent to 307 yen as of the 11 a.m. trading break on the Tokyo Stock Exchange today. The shares have lost 63 percent this year, compared with a 48 percent decline by the Nikkei 225 Stock Average.

To contact the reporter on this story:
Pavel Alpeyev in Tokyo at 
palpeyev@bloomberg.net.

Last Updated: December 4, 2008 22:32 EST