Business  » Corporate

Electronics and manufacturing giant Toshiba said Wednesday it is to shut three semiconductor factories in Japan as part of a reorganisation of its business.

It said production from the shuttered plants will be moved to three already existing factories, which will "allow Toshiba to strengthen cost competitiveness and focus on higher value added products".

The company said it would concentrate production at three "major facilities" and boost its "eight-inch wafer product line" while cutting back on the production of the six-inch wafer.

"Toshiba has been... accelerating the transfer of assembly and test operations to overseas facilities, outsourcing, shifting to larger diameter wafer production lines and halving its product line-up," the company said.

"The latest measure will secure asset reduction through concentration of production facilities and further strengthen cost competitiveness by boosting productivity."

It added: "Regular employees at the affected facilities will, in principle, be redeployed within the Toshiba group."

Toshiba last month announced net profit in the six months to September had dropped 18.5 per cent, mainly due to a strong yen and the impact of the March 11 earthquake and tsunami.

Toshiba's group net profit came to 22.7 billion yen ($287 million) and operating profit declined 23.4 per cent to 80.2 billion yen with sales down 5.5 per cent at 2.9 trillion yen.

The revenue and profit declines were mainly due to a slump in its digital products and electronics devices businesses, which were hit by "the impact of sharp yen appreciation and the March earthquake," a company statement said.

Semiconductors, the basis of the modern electronics industry, are found in hundreds of everyday items, from mobile telephones to cars.

The global economic slowdown has stalled demand in many markets for electronic goods.

This slowdown in demand, coupled with the persisting strength of the yen, which hits the profitablity of Japanese exporters, has punished manufacturers of high end components.