Hitachi is leaving the information and telecoms chips business by the end of 2014.
The Japanese manufacturer said on Friday that the semiconductor industry has seen an "increasingly horizontal division of labor" in terms of development, design and manufacturing in recent years. In order to try and curb manufacturing costs and boost production efficiency, Hitachi has pushed the development of some semiconductor products to external outsourcers -- but considering the economic climate, the firm has decided to cut out semiconductor production altogether.
The Japanese manufacturer now plans to fully outsource semiconductor production for the information and telecoms business, which is presently held under the firm's Micro Device Division.
"The intent of this move is to optimally allocate management resources to bolster the competitiveness of the entire Information & Telecommunication Systems business." Hitachi said in a statement.
The manufacturer is attempting to grow its "Social Innovation Business," and the current production decision is aimed at making the company more competitive worldwide.
The Japanese company has not disclosed what this decision means for its workforce, but said that the reassignment of human resources will be "examined" as the firm goes ahead with its decision.