TOKYO (AFP) - Japans Mitsubishi Electric said Monday that it will stop making mobile telephones because of a bleak outlook for the loss-making business, which is facing tough competition.
Japans mobile telephone market has limited room for further growth as most people already own a cellphone and the population is shrinking.
"Consequently, Mitsubishi Electrics mobile handset business has recently suffered shipment decreases and it has become extremely difficult to expect an improvement in this field," a company statement said.
Japan, a nation of 127 million people, has more than 100 million mobile phones in operation, creating a major challenge for service providers to achieve growth.
Mitsubishi expects its mobile phone sales in the current fiscal year to March to amount to 2.1 million handsets, worth a total of 100 billion yen (970 million dollars), mainly for leading Japanese carrier NTT DoCoMo.
Mitsubishi has a relatively small share of the overall Japanese market which has annual sales of about 50 million handsets.
The company said it was not planning any layoffs, with roughly 600 workers in the mobile phone business expected to be relocated to other operations.
The move will cause a temporary loss of about 17 billion yen in the groups pretax losses in the current fiscal year to March.
Mitsubishi Electric will shift resources to areas with brighter prospects, such as communication infrastructure, home and business security systems, and factory automation systems.
The move is the latest case of a Japanese firm realigning its operations, axing or spinning off weak businesses to focus on areas of strength.
It comes only weeks after rival Sanyo Electric decided to sell its mobile handset production operations to rival Kyocera.
Among other recent examples of restructuring, Toshiba exited high-definition DVD while Hitachi decided to withdraw from the personal computer business.
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