UPDATE 3-Toshiba NAND chip plant halted by power outage

* Toshiba NAND shipments may be cut up to 20 pct Jan-Feb

* Analysts eye prices in midst of tablet craze

* Could benefit rivals like Samsung
(Adds quotes, background on NAND, stock prices)

By Isabel Reynolds and Kentaro Hamada

TOKYO, Dec 9 (BestGrowthStock) – Production at one of Toshiba
Corp’s (6502.T: ) key chip factories has been halted by a brief
cut in power, the company said, hitting output of NAND flash
memory used in tablet computers and smartphones.

Shipments of NAND from the central Japan plant could be cut
by up to 20 percent in January and February, even with the
factory due to resume normal operations on Friday, a Toshiba
spokesman said on Thursday.

That could make NAND memory used in mobile devices more
expensive just as manufacturers prepare to launch a slew of
tablets to compete with Apple Inc (Read more about Apple stock future.)’s (AAPL.O: ) explosively
popular iPad.

“There could be an increase in prices. We’ve heard Apple’s
demand for flash in 2011 is going be up 100 percent over 2010
so this is a bad time to have a shortage,” said Kevin Cassidy,
an analyst at Stifel Nicolaus.

Toshiba, the world’s No. 2 NAND chipmaker after Samsung,
produces all its NAND memory at the Yokkaichi facility and its
halt could help rivals like South Korea’s Samsung Electronics
(005930.KS: ).

The Toshiba spokesman declined to comment on the extent of
the likely effect on chip business operating profits, which the
company said in September were on track to hit 100 billion yen
($1.2 billion) for the year to next March.

Shares of Toshiba dropped 1.6 percent to 430 yen while
Samsung rose 3.3 percent to 917,000 won.

Some analysts estimate Apple consumes about a third of the
global supply of NAND, a commodity product whose price is
mostly driven by supply and demand rather than quality.

Cassidy estimated that NAND flash prices rose about 10
percent earlier this month and could climb another 10 percent
due to Toshiba’s production halt.

Higher NAND costs might even impact prices consumers pay
for new smartphones and tablets that Apple’s rivals plan to
launch next year.

“If flash memory pricing goes up short term because of
these supply shortages then it’s going to make the new tablets
being introduced more expensive because all the tablet guys
will just pass on that pricing,” said Krishna Shankar, an
analyst at ThinkEquity.

Chubu Electric Power Co (9502.T: ) said there had been a fall
in voltage in its power supply in the area, but the cause was
not immediately clear.

“Once things calm down I think there may be talk about
compensation,” said Yuichi Ishida, an analyst at Mizuho
Investors Securities. Toshiba declined to comment on whether it
would be seeking compensation.

Japanese refiner Cosmo Oil Co (5007.T: ) said on Wednesday it
had stopped operations at its refinery in Yokkaichi due to the
outage. One crude distillation unit will be re-started this
weekend and the remaining refining units next week.
(Additional reporting by Noel Randewich in San Francisco;
Editing by Richard Chang)

UPDATE 3-Toshiba NAND chip plant halted by power outage