Sony Moves Production to China
Sony Computer Entertainment has revealed that it plans to move Playstation 2 production to China. Taiwanese companies Hon Hai Precision Industry Co. and Asustek Computer Inc. will handle production starting this next fiscal year. Shifting assembly to China would allow an increase in profit margins for Sony and would lower labor costs. Also, due to this financial situation, the company has the potential to cut the price of the console.
"A price cut will happen this year, probably between May and summer," said Zachary Liggett, an analyst at WestLB Securities Pacific Ltd. "Moving production will give Sony the flexibility to cut prices.'' Merrill Lynch Securities analyst Hitoshi Kuriyama who stated, "Sony will probably cut the retail price of the PlayStation 2 by 25 percent this year", seconded that ideal.
Kuriyama added "Production costs will probably fall 11 percent in the year starting April 1, partly because of the move to China but also because of lower prices for parts used in the console and cuts in the number of components.