UPDATE 1-Hynix to cut NAND chip output on weak market

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SEOUL, April 1 (Reuters) - Hynix Semiconductor Inc (000660.KS: Quote, Profile, Research) said on Tuesday it was reducing its NAND flash memory output citing weak market conditions, as makers struggle with sliding chip prices and sluggish demand for consumer electronics.

Hynix said the output cut would be made by delaying the start of mass production at its new memory line from the second quarter to the third and retiring an old production line.

Hynix is the world's third-biggest maker of NAND flash memory, used in digital cameras, music players and flash storage cards. It had a 17 percent share in the global market last year, trailing home rival Samsung Electronics Co Ltd (005930.KS: Quote, Profile, Research) and Japan's Toshiba Corp (6502.T: Quote, Profile, Research).

Hynix did not provide the size of the output cut or how much it represents in the company's annual production target, but said its production shortfall accounts for about 5 percent of the NAND chip capacity worldwide.

"The start of mass production at our M11 line has been delayed to the third quarter from the second," a Hynix spokeswoman said. "It is an intentional delay, given current market conditions."

She said Hynix was also shutting down an existing production line by the third quarter.

The 2008 outlook for NAND makers is dim as global consumer spending suffers from a worldwide economic slowdown. Apple Inc (AAPL.O: Quote, Profile, Research), a top buyer for NAND and the maker of popular flash-memory based iPods, has said demand growth will slow this year.

In March said Toshiba said it expected NAND prices to fall about 35 percent in January-March from the previous quarter and even more in the year April 1.

U.S. research firm iSuppli forecast in February a mere single-digit percent growth in 2008 global NAND flash memory revenue, down from its previous prediction of a 27 percent rise. (Reporting by Rhee So-eui; Editing by Keiron Henderson)