Toshiba-G500.jpgSign of the times. Toshiba is to end cellphone production in Japan and to save costs, outsource some production to “overseas manufacturers”, which in this industry invariably means no-name Chinese electronic manufacturing services (EMS) firms.

It said its existing operations in the Chinese city of Hangzhou would not be affected by the closure of its Japanese facilities.

As the mobile phone business matures, competition and pricing pressures increase, and sooner or later every brand-name manufacturer ends up having to make difficult decisions about the viability of manufacturing phones in its home country, where costs are invariably higher than in low cost countries like China.

Philips, Siemens and Alcatel were all too slow to make the adjustment and their mobile phone operations were either closed down or, in the case of Alcatel, sold to China's TCL which has since resurrected the Alcatel brand — see this story.

If it is not quick to respond, Toshiba looks like it could fall down the same slippery slope of declining sales and stubborn costs.

Toshiba's mobile phone unit sales halved last financial year, causing it to report its first annual operating loss on these operations in five years.

Toshiba is Japan's sixth largest phone maker with a 7 percent market share.

Technorati : , , , , , , , ,

email