Sony plans to consolidate the production of core components for its products at some factories, aiming for economies of scale through mass production, the Nihon Keizai Shimbun said, citing company sources.

The consolidation is being prompted by intensifying competition from South Korean and Chinese firms making consumer electronics and data communications equipment, the newspaper said.

Sony has concluded that it cannot meet the competition in the ongoing deflation unless it reduced the number of factories, it said.

The company now runs about 30 assembly plants and some 20 factories manufacturing components worldwide.

The expected consolidation of factories will form the center piece of a 300 billion yen (2.6 billion dollar) structural reform announced in April.

As part of the realignment, Sony will put assembly plants in charge of after-sales services like repair and maintenance. These services will become more essential as the firm's products feature increasingly advanced functions, the newspaper said.

Sony hopes that these services will also help cultivate new demand, the Nihon Keizai said.

The company is to announce a new management plan for the year to March 2004 later Wednesday.

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