Fujitsu will restructure domestic factories in a bid to improve efficiency in making such hardware as servers, large mainframes, external data storage devices and telecommunications equipment, a company spokeswoman said.

The company hopes to compete more effectively with inexpensive Chinese- and Taiwanese-made goods, the spokeswoman said, adding it wanted to reach its goal by March 2006.

"On September 1, we launched a special division to review our domestic production operations," she said.

"We want to stay competitive and we want to improve efficiency of our production sites," she said, without elaborating.

The firm intends by the end of fiscal 2005 to halve its factory inventory, the time it takes from receiving orders to completing products, and the manufacturing expenses, the Nihon Keizai Shimbun said.

In order to lower the manufacturing cost of servers, Fujitsu will unify the basic design of its Windows- and Linux-compatible models, the paper said.

The company will also consolidate production of external data storage devices to Fujitsu IT Products Ltd., a main factory for information technology equipment, the newspaper said.

Fujitsu will also receive from Toyota Motor Corp. know-how to cut manufacturing cost at key sites, the Fujitsu spokeswoman said.

The reform initiative came less than three weeks after Standard and Poor's downgraded its rating on Fujitsu to "BB plus" from "BBB minus" due to the company's weak financial profile and slow recovery of its earnings and cash flow.

Fujitsu said in July it continued to lose money in the June quarter due to weak global demand, a delay in mobile phone shipments and damage suffered from an earthquake in May.

SPACE.WIRE