NEC announced Friday that it plans to end production of hard disk drives and exit the market altogether.
The company currently operates one plant in the Philippines, NEC Computer Storage Philippines Inc., through a technology license agreement with IBM Corp. At the factory, which is at Binan near Manila, 3.5-inch disk drives are produced and supplied to IBM under contract.
"The current production contract with IBM will expire in December," said Kosuke Yamauchi, a spokesman for NEC, "and if we want to enter new production we will have to invest more money but we cannot expect a worthwhile return (on the additional investment)."
The plant currently employs 1,400 people and all will be laid off as a result of the decision, said NEC.
The company's announcement came as it disclosed earnings figures for the period from April to September this year. Largely as a result of losses from the PC components and semiconductor division, the company slid into the red for the period, it said.
NEC's move follows that of Fujitsu, which announced earlier this year that it plans to exit production of 3.5-inch hard disk drives. Fujitsu blamed tough competition in the market for its decision and said it would instead concentrate on design, development and production of 2.5-inch drives for portable and consumer electronics products.