Philips moves optical storage unit to Taiwan

Dutch Koninklijke Philips Electronics NV will move most of its optical storage business to Taiwan and concentrate on DVD+RW (DVD+rewritable) products in a move to restore profitability at the ailing unit, the company said Tuesday.

Philips Optical Storage faces tough competition amid a slump in PC sales. Customers include Dell Computer Corp., with which Philips earlier this year signed a five-year multibillion dollar deal to supply PC monitors and components, including optical storage products.

The move to Taiwan, where Philips already has a development partnership with Benq Corp. to work on development of optical storage products, will affect 390 workers in Hasselt, Belgium. About 45 of those will be offered positions elsewhere within Philips, the company said in a statement.

As part of the move, Philips will eliminate unprofitable product lines and focus on DVD+RW, which provides healthy margins for the company, it said. A Philips spokesman declined to detail which products the company will axe, though he stressed the plans will not affect customers.

After the move, most of Philips PC-related optical storage activities will be in Asia and a Taiwan headquarters for the business will be established next year, Philips of Amsterdam said. Losses at the unit should be stemmed within two quarters, it said.

Philips Optical Storage was the biggest bleeder in the Philips Components division, accounting for over half of the losses at the unit in the third quarter. Philips in October said it would dissolve Philips Components.