Toshiba head wary on NAND spending amid supply glut

TOKYO, June 25 (Reuters) - Toshiba Corp's (6502.T) new president said he would take a cautious approach to boosting production of NAND flash memory given the market still had a glut of chips and in view of the risk that rivals may follow suit.

Toshiba, Japan's biggest chip maker, has been shifting its focus to its stable power business while cutting spending in its loss-making semiconductor business, which has eroded its capital and forced it to raise $5 billion earlier this year.

Toshiba, which analysts expect will log a second straight net loss in the year to March 2010, is waiting for demand for electronics to pick up before deciding on whether to restart stalled plans to build two NAND plants, Norio Sasaki said.

"If we say we are raising capacity, others will do the same... When we all act out of suspicion and do not read (the market) well, it yields excess output," Sasaki said on June 19 in a group interview embargoed until Thursday.

Sasaki, who was approved as president at an annual shareholders' meeting on Wednesday, rose through the ranks in the company's power generation division and led the firm's acquisition of U.S. nuclear power firm Westinghouse in 2006.

Known to be a tough taskmaster and a workaholic at the company, Sasaki can crack a joke, too. Among Toshiba's products, he likened himself to a nuclear reactor -- "because I am heavy."

His promotion to the top spot marks a shift in Toshiba's focus towards industrial power systems and away from the consumer electronics business from where his predecessor, Atsutoshi Nishida, hailed.

Toshiba's plan to build two NAND flash memory plants in Japan this year has been derailed by relentless annual chip price falls of more than 70 percent.

The company, which aims to catch up to top global memory maker Samsung Electronics Co Ltd (005930.KS), will wait for a recovery in final demand before building the plants, Sasaki said.

It will also look at its June chip sales before deciding whether to end its current output cuts of 30 percent, in place since January.

The company is now looking beyond NAND, Sasaki added.

"When will this rush to shrink circuitry on chips hit its limit?" he said. "We are covered for the next generation of chips, but we have to plant the seeds now for the generation after that, and also begin preparing for post-NAND."

Sasaki takes over the helm as Toshiba grapples with low prices for its semiconductors, used in Sony Corp's (6758.T) PlayStation 3 and Apple Inc's (AAPL.O) iPhone.

It logged a 250 billion yen ($2.6 billion) operating loss for the year ended in March on its semiconductors.

The 60-year-old nuclear power generation engineer is charged with carrying through a plan to cut $3 billion in costs in its chip operations and revamp its semiconductor lineup.

"In particular, we are spread too thin in system chips, and we will review each product and focus on those that generate solid profits," he said.

In contrast to its bleak semiconductor business, Toshiba, which owns U.S. nuclear plant firm Westinghouse, is on track to secure better-than-expected results in its nuclear power plant projects in China and the United States, he said. ($1=95.11 Yen) (Reporting by Taiga Uranaka; Writing by Mayumi Negishi)