TOKYO, Feb 06, 2009 (AFP) - Japan's struggling NEC Corp. will withdraw from the personal computer business in Europe amid growing competition from US and Taiwanese rivals, an official said Friday.
The decision follows NEC's move to cut 20,000 jobs worldwide in money-losing operations as it braces for a net loss of 290 billion yen (3.2 billion dollars) in the year to March due to slumping sales.
NEC plans to stop making corporate-use PCs at NEC Computers SAS in France, its European base for production of PCs and servers, in the middle of this year, company spokeswoman Akiko Shikimori said.
NEC had already sold off its consumer PC business in Europe in 2006.
"We have started talks with representatives of employees and their union at NEC Computers SAS about the plan, which will affect 420 employees," she said.
The French unit, located in Puteaux near Paris, will downsize its plant and shift to production of server-related items, Shikimori said.
"The business has become tougher as price competition intensifies" with US and Taiwanese firms, she said.
NEC pulled out from the PC market in North America in 2000. It still remains in PC markets in Southeast Asian countries including Malaysia, Singapore and Thailand.
With the pullout, the company is expected to focus its business resources on the domestic market, where it holds the biggest share with annual shipments of about 2.5 million units.
NEC Computers SAS ships some 400,000 desktop and notebook PCs annually, accounting for about 13 percent of NEC's total. It is estimated to post PC sales of 24 billion yen in the year to March.
NEC said last week that group net losses soared 13-fold in the nine months to December from a year earlier to 129.0 billion yen, up from 9.98 billion yen a year earlier.
Japan's high-tech giants have been badly affected by the global economic slowdown, which has pushed down demand for their products and sent the yen soaring, eroding export earnings.
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Copyright AFP 2009.
