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Last updated: October 23, 2007 5:32 pm

Hitachi to stop making personal computers

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Hitachi is set to halt development and production of personal computers for home use, in the latest move by a Japanese electronics conglomerate to get out of unprofitable business lines.

Japanese PC makers are increasingly losing out to global giants such as Hewlett-Packard, Lenovo and Dell, which have the economies of scale to be able to cut their competitors on price. Hitachi, which 30 years ago helped pioneer PC technology in Japan, only had about a 4.5 per cent share of the Japanese market last year, according to MM Research Institute.

Hitachi, whose businesses range from rice cookers to nuclear power, yesterday said it would focus on developing computers for use in the broadcasting industry, which is becoming more digitised.

Hitachi will continue making and selling business-use PCs. In the fiscal year to March 2007, Hitachi shipped 134,600 home-use PCs in Japan, the company said. Total PC shipments, including business use PCs, was 505,700.

The company said it would cut production at its plant in the Aichi prefecture, in central Japan, to business-use PCs. It will stop developing its Prius-brand PCs and the models that made their debut this summer will be the last ones on the market. The company will keep its support and service lines open for customers who own its PCs.

Hitachi is also exploring the possible sale of its loss-making hard disc drive unit, according to people familiar with the situation. Hitachi acquired the business in 2002 for $2bn from IBM. The unit has reported a loss every year since then. This year its operating loss is expected to total Y33bn ($287m), from Y43.7bn last year.

With Japanese consumer electronic groups facing increasing pressure from overseas rivals, many have begun to offload non-core businesses.Sanyo, for example, is in talks to sell it mobile phone unit to Kyocera, while Sony is set to sell its advanced semiconductor facilities to Toshiba.

Other Japanese companies have been seeking tie-ups. Sharp recently said it would take a 14 per cent stake in Pioneer, its smaller rival. Kenwood and JVC announced a tie-up earlier this year.

Hitachi’s shares closed up 0.14 per cent to Y735.

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