Toshiba denies report on chip packaging JV with ASE

TOKYO/TAIPEI, Aug 4 (Reuters) - Japan's Toshiba (6502.T), the world's No.2 maker of NAND flash memory chips, denied on Monday a report that it was in talks with Taiwan's ASE (2311.TW) to jointly set up a plant to assemble and test NAND memory chips in Japan. Citing market sources, Taiwan's Commercial Times reported Monday that Toshiba and Advanced Semiconductor Engineering Inc (ASE), the world's top chip packaging and testing firm, were set to sign a contract on the plant later this year and that operations were likely to start next year.

Toshiba and rivals such as Samsung Electronics Co (005930.KS) and SanDisk (SNDK.O) are increasing the outsourcing of packaging and testing to Taiwan firms to reduce costs as they are struggling with falling prices, the Taiwanese newspaper said.

No dollar figures were given.

"There is no truth to the report," Keisuke Ohmori, a Toshiba spokesman, said. "No such talks exist." The Chinese-language paper said ASE (ASX.N) declined to comment, only quoting unnamed ASE officials as saying that the firm was interested in any deals that would help boost its orders.

Two years ago, ASE joined hands with Powerchip Semiconductor (5346.TWO), Taiwan's top DRAM chip maker, to set up a $50 million DRAM chip packaging and testing venture in Taiwan.

DRAM chips are mostly used for personal computers, while NAND flash chips go with a wider array of consumer gadgets, such as mobile phones, digital cameras and portable music players. By 0306 GMT, ASE's Taipei-listed shares fell 1.3 percent, underperforming a 0.2 percent fall on Taiwan's main TAIEX index . Toshiba shares dropped 1.2 percent, in line with the Nikkei's .N225 fall when its morning session ended. (US$1=T$30.7) (Reporting by Baker Li and Mayumi Negishi, Editing by Jonathan Hopfner)