Chip Decline Spurs Big Toshiba Loss

The company cited sluggish demand for chips used in digital cameras and music players, as well as oversupply and price drops, according to Reuters. Toshiba's earnings releases also suggested "notably lower sales and fewer shipments" for Toshiba's mobile phone business and "price erosion" in its PC business.

Toshiba announced an operating loss of about $1.76 billion (158.8 billion yen) for its October to December quarter compared with a profit of 42.1 billion yen the previous year. It warned operating losses for the fiscal year's end on March 31 would be 280 billion yen, whereas in previous forecasts Toshiba had predicted a 150 billion yen profit. Toshiba shares dropped 19 percent in the October to December period, Reuters reported.

"Recovery in chip market demand is not likely until at least October, which means our semiconductor business will probably turn profitable in the second half of the next fiscal year," said Toshiba President Atsutoshi Nishida in a press briefing in Tokyo.

Toshiba also said it planned to buy a piece of SanDisk's 300mm wafer-line production facilities for $888 million. Toshiba and SanDisk, a U.S. chip partner, have pulled back on chip output to stymie the weak demand, according to Reuters.