The semiconductor industry is struggling around the globe. The industry is being hit form different fronts with falling profits due to an oversupply in the market and the global economy resulting in declining orders for semiconductors.

Today two of the largest and most stable firms in the semiconductor industry -- SanDisk and Toshiba -- announced that they would stop production in two fabs for a period and then restart at lower outputs. The two firms say that their joint production facilities including Fab 3 and Fab 4 will be temporarily halted from December 31 to January 12.

After the short halt in production, the NAND makers say that production will begin again at roughly 70% of the current production capacity. SanDisk admits that the reduction in capacity will drive wafer costs up due to underutilized capacity.

However, the firm expects the steps to align its output in 2009 with demand in the current global market. SanDisk says it will give more details on the changed during its Q4 2008 earnings conference call. Toshiba says that Fab 3 and Fab 4 produce flash memories on 300mm wafers, while its Fab 1 and Fab 2 are on 200mm wafers. Fab 1 and Fab 2 will also have production halted for four days over the same year-end period as Fab 3 and Fab 4.

Foreign governments are set to begin helping DRAM and semiconductor manufacturers save their businesses from collapse via loans and other incentives. The collapse of the DRAM market could have huge ramifications for the computer industry as the supply could dwindle rapidly leading to price increases at a time when the economy can’t support the current prices.