Toshiba Corp., the world's No.2 maker of flash memory, on Wednesday warned that profits in its chip business could fall short of expectations, citing weak PC sales, faltering U.S. and European economies and a higher yen.
"We have not given up yet, but there is risk of undershooting," said Kiyoshi Kobayashi, head of Toshiba's semiconductor unit, referring to the firm's operating profit forecast for its semiconductor business in April-September of 55 billion yen ($712 million).
"Usually, we start to see a pickup in demand for NAND (flash memory chips at this time of year), it is coming a bit late. And the yen's gains have just been too big," Kobayashi told analysts and reporters.
The company's chip business posted an operating profit of 1.6 billion yen for the April-June quarter, down more than 90 percent from a year earlier.
While Kobayashi said the overall NAND market was "not so good," he added that Toshiba has been faring relatively well thanks to big clients that enjoy solid sales.
He said that price falls for its NAND flash memory chips have been much smaller than those traded in the spot market.
"We are doing various (business) with a company that has good mobile phone sales," he said, without naming the client.
Toshiba, which trails South Korea's Samsung Electronics, is a supplier to Apple Inc and has benefited from strong sales of tablet PCs and smartphones.
Prior to the briefing, Toshiba shares ended up 1.2 percent at 344 yen, in line with a 1.1 percent gain in the benchmark Nikkei average. ($1 = 77.290 Japanese Yen)
(Reporting by Kentaro Hamada and Taiga Uranaka; Editing by Joseph Radford)