Toshiba announced this week that it is discontinuing production of notebook computers at its factory in the Philippines at the end of December, shifting all of its notebook PC production to outsourcing partners and its manufacturing facilities in Hangzhou, China.

 

The move is part of Toshiba's efforts to restructure its business after price wars with HP and Dell forced the Japanese maker to cut earnings forecasts for its PC unit three times over the last fiscal year. Toshiba plans to boost the amount of notebook PC production that is outsourced to over 50% in order to lower production costs. No details were given about how much the company expects to save.

 

Toshiba employs about 6,500 people at its Philippine factory, and the company indicated that they would be shifted to hard disk drive production. According to Toshiba, production at the Philippine factory had been running at about 100,000 units a month for notebook PCs and one million units per month for hard disk drives. Hard disk drive production will now increase by 20% between January and March 2005 to reach 1.2 million units. Toshiba intends to double annual PC production at the Hangzhou plant to three million units by March 2006.

 

For the six-month period ending in September 2004, Toshiba's PC unit posted operating losses of 7.2 billion yen (US$69.3 million; US$1 = 103.92 JPY). The Japanese maker is presently pushing sales in the US and Europe in an all-out effort to erase those losses by the end of the fiscal year in March 2005.