The company said it also aimed to cut overall costs by around three billion dollars a year within three years and shift production of cheaper mass market goods to China and elsewhere in Asia, while retaining production of high added-value devices such as semiconductors in Japan.

"Sony plans to reduce the consolidated number of Sony regular employees by about 20,000 over a three-year period. This will include about 7,000 employees in Japan," Sony said in a statement.

It said the total workforce as of March stood at 154,500, excluding the finance sector.

The company said it would implement a second phase of structural reforms, including its electronics, entertainment and other major divisions "to create a highly efficient, high added-value operational structure."

For the three years to March 2007, the company said it planned to spend 335 billion yen (3.1 billion dollars) -- 300 billion yen of it in the electronics sector -- to achieve annualised fixed cost savings of roughly 200 billion yen compared to fiscal 2002.

Together with savings in non-production materials, total fixed costs would be reduced by roughly 330 billion yen, Sony said.

Costs would be reduced by focussing on strategic businesses, accelerating the reform of the manufacturing sector, streamlining administration and sales, and reforming procurement.

Manufacturing in Japan, China and Asia would be further differentiated, with Japan serving as the "advanced production technology base" as its focus shifts from assembly to key devices and semiconductors.

Chinese production will concentrate on serving the rapidly expanding domestic market and "cost-competitive mass production," a function shared with other manufacturing bases in Asia, Sony said.

Sony said it aimed to achieve a consolidated operating profit margin "of at least 10 percent (excluding the financial business) by the end of fiscal year

"Sony also believes that these changes will lay the foundation for the creation of new value and significant growth from fiscal year 2006 onwards," the statement said.

In April, the thumbs down from investors to Sony's earlier plan to overhaul its global structure and its worse-than-expected full year earnings for the year to March caused a "Sony shock" which helped drive Tokyo's Nikkei 225 index to a two-decade low.

Separately, Sony and South Korean microchip giant Samsung Electronics announced they had signed a memorandum of understanding to establish a joint venture to produce flat panel television screens in South Korea.

SPACE.WIRE