Toshiba will reduce procurement costs to stay competitive.The company - which makes everything from computer chips to nuclear reactors - will reduce its procurement costs for various electronics components by 1 trillion yen, or $11.6 billion, over three years by switching to overseas providers. Toshiba is under intense pressure to cut costs in order to remain competitive with its Korean and Chinese rivals, as well as other Japanese technology companies with similar brand strength, such as Sony.

Overseas suppliers currently account for approximately 57 percent of Toshiba's manufacturing components. In order to cut costs, the company will source more than 70 percent of its supplies from abroad starting in April of 2010.

Cost efficiency is essential to electronics manufacturers, especially those selling to emerging markets in Asia. The Wall Street Journal also reports that Hitachi, another Japanese manufacturer, will compete with Toshiba by increasing dependence on overseas suppliers as well - reducing its own per-unit production costs by as much as 40 percent.

Toshiba is currently the world's second-largest manufacturer of NAND-type chips - used in televisions, computers, gaming systems and other consumer electronics - trailing only Samsung.
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