Tokyo, Japan – Japanese electronics makers will boost chip assembly and test operations in China to cut production costs for lower-priced ICs used in consumer electronics goods, according to reports by Dow Jones.

The move shows companies’ increased efforts to stay competitive by using cheaper labor in China after they were severely hurt by the global technology slump last fiscal year. It also highlights their global strategies to explore the huge Chinese market with China increasingly becoming the global manufacturing base for household electronic products.

Mitsubishi Electric Corp. said it plans to almost double its monthly IC output capacity at its Beijing assembly plant from 18 million units to 35 million next fiscal year starting April 2003 , Dow Jones reported.

“This is based on our plan to reduce (domestic group) chip assembly and test firms, and we will transfer their operations to China ,” a Mitsubishi Electric spokesman said.

Through the move, Mitsubishi Electric said it plans to increase its China-based assembly ratio of related ICs to 80 to 90% from the current 50% or so.

Toshiba Corp. said it will seek to expand its monthly IC production capacity at its assembly plant in Wuxi, Jiangsu Province, from 3 million to 30 million.

“However, specifics have not been decided yet, including timing and investment amount,” a Toshiba spokesman said.

Hitachi Ltd. said it plans to more than double in 2003 its output capacity of mobile phone ICs at its assembly plant in Suzhou, Jiangsu Province, from the current 1.2 million a month.

At midday Wednesday on the Tokyo Stock Exchange, chipmaker shares were mixed amid modest buying in the overall technology sector.

Mitsubishi Electric was up 1.2% at Y611; Toshiba was up 1.5% at Y530; and Hitachi was down 0.1% at Y908. The benchmark Nikkei 225 Stock Average was 0.7% higher.