Toshiba Corp., the maker of products from flash-memory chips to steam turbines, will cut the number of workers in its global television operations by half to 3,000 as it boosts outsourcing of production.
As much as 70 percent of TV output will come from other manufacturers by the year ending March 31, 2015 from 40 percent now, Tokyo-based Toshiba said in a statement today. The company is targeting cost reductions of 20 billion yen ($204 million), spokesman Toru Ohara said by phone.
Japanese TV makers are struggling with stalling demand and falling prices amid competition from South Korean rivals including Samsung Electronics Co. and LG Electronics Inc. Toshiba is expanding in semiconductors, medical systems and energy amid falling sales of liquid-crystal-displays and 100 billion yen of TV losses in the past two years.
“In TVs it’s difficult to compete against the South Korean makers and Toshiba wasn’t able to add extra value to its TVs,” said Tsunenori Ohmaki, an analyst at Tachibana Securities Co. in Tokyo. “It’s positive for Toshiba to take action before losing more money.”
The company will restructure its visual and home-appliance business and close two of the three internal TV production sites it has overseas, the company said. Ohara decline to say which plants it will keep.
Toshiba had about 206,000 workers as of March 31, according to data compiled by Bloomberg.
The company last month forecast operating profit will double in three years, rising to 400 billion yen in the 12 months ending March 2016 from 194 billion yen last fiscal year. Toshiba forecast sales of 7 trillion yen in the year ending March 2016.
Toshiba fell 1.1 percent to 440 yen at the close in Tokyo. The stock has risen 31 percent this year, compared with a 39 percent gain for Japan’s Topix index.
The company got 43 percent of last year’s sales from its Social Infrastructure unit, which included power systems and medical equipment. Digital products, such as TVs and personal computers, accounted for 24 percent of revenue, according to data compiled by Bloomberg.