Japanese electronics conglomerate Toshiba said it now expects to post an operating loss in the first half and slashed its full-year forecast to below market expectations due to a weak semiconductor market.
The microchip industry is beset by falling prices and excess capacity. Sliding prices of NAND chips, used in portable music players, digital cameras and cellphones, are also hurting Samsung Electronics Co and Hynix Semiconductor.
Toshiba said it now expects to post a group operating loss of 30 billion yen ($281 million) for the April-September first half, a 100 billion yen swing from its previous forecast of a 70 billion yen profit.
It would mark Toshiba's first operating loss for the first half in five years. In April-September last year it posted an operating profit of 82.5 billion yen.
Fujio Ando, senior managing director at Chibagin Asset Management, said Toshiba is hurting from sinking consumer spending in a weakening global economy.
"The impact from NAND is huge because the company has poured most of its energy and capital investment into the business," he said.
"Aside from solar panels, flat screen TVs and Blu-ray disks, there's no area of growth among digital products."
Toshiba cut its outlook for the year to March to an operating profit of 150 billion yen from a previous forecast for a 22 per cent rise to 290 billion yen.
The new forecast is below the consensus of 188 billion yen in a poll of 16 analysts by Reuters Estimates.
Toshiba said it would post a 65 billion yen loss on semiconductors in the year to March - 155 billion yen below its April forecast due to price falls in NAND and weak sales of system chips.
"The outlook cut is almost entirely due to losses in the chip business, and we will concentrate our efforts in turning that around next business year," Fumio Muraoka, Toshiba's corporate executive vice president, told a news conference.
He said it is considering pushing back capital investment plans in its chip business.
Toshiba raised the annual profit outlook for its social infrastructure business by 20 billion yen to 150 billion yen on strong sales of thermal and nuclear power, but did not raise its overall profit forecast.