Toshiba Heads to Hangzhou?

Posted by Matthew Brodsky

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Toshiba Corporation, the world's third largest PC maker, is moving its production equipment to China.

Toshiba Corporation, the world's third largest notebook PC maker,has initiated a cost-cutting strategy to halt laptopmanufacturing at its plant in the Philippines. The Japanesecompany is moving its notebook production equipment from thePhilippines to Hangzhou, China, which is the capital of China'seastern Zhejiang Province. Toshiba also shifted its Shanghaiproduction to Hangzhou in January 2005.

Previously, the Philippines plant manufactured 100,000 notebooksper month and employed 6,500 people. Located in that nation'sLaguna province, the factory distributed its product to SoutheastAsia, Europe, and the United States. Toshiba also maintainednotebook production plants in Shanghai for distribution to theChinese market and in Hangzhou for distribution to the Europeanand American markets.

By consolidating this production capability at its Hangzhouplant, Toshiba makes the city its only overseas notebookmanufacturing site.

The restructuring comes after a challenging business year forToshiba's PC and PC peripherals division, during which the firmreduced the division's earnings estimate on three occasions. Thecompany faced steep price slashing from its laptop competitorsincluding HP and Dell Inc.

Filipino government officials claim that Toshiba will not shedjobs at its Laguna plant due to this restructuring process. Toshiba is instead reassigning the workers to its high-density drive(HDD) production lines. This shift comes at a time of largegrowth in the HDD market thanks to the technology's increased usein non-PC products, such as digital electronics and cars.

Toshiba and the Philippines are no strangers to the HDD market.According to the Semiconductor and Electronic Industries in thePhilippines, Inc., the top three manufacturers of 2.5-inch orsmaller HDDs--Fujitsu,Hitachi Global Storage Technology, and Toshiba -- All have theirproduction plants in the Philippines. The Toshiba plant put out amillion HDD units per month in the first half of 2004.

Toshiba plans to increase this production by 20 percent in thefirst quarter of 2005, to 1.2 million units per month, throughthe restructuring process. The firm estimates that its notebookPC production at the Hangzhou plant will double, increasing to 3million units per year by the end of March 2006. In the lastyear, the Chinese plant exported 1.18 million notebook PCs andtotaled US$2.266 billion in imports andexports.

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