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Seiko Epson Corp. said Wednesday it plans to consolidate its struggling computer chip and liquid crystal display production facilities in Japan as it anticipates its biggest-ever loss for fiscal 2008 on declining demand under the global economic crisis.

For the fiscal year ending this month, the Japanese printer maker said it now expects its group net loss to expand to a record ¥100 billion from an earlier forecast of ¥4 billion. It maintained its operating profit projection at ¥6 billion on sales of ¥1.14 trillion.

“We expect the current economic downturn and the appreciation of the yen to last at least until 2010, and the downward trend of prices and demand is likely to continue,” Seiko Epson Managing Director Kenji Kubota said at a press conference in Tokyo.

The downward earnings estimate revision is mainly attributed to restructuring and asset impairment costs totaling about ¥66.2 billion for its electronic device division, the company said.

Kubota said the firm will realign the unprofitable computer chip and LCD production facilities to focus on its mainstay printer and projector businesses as it aims to cut any pretax loss to zero in fiscal 2009.

Seiko Epson intends to shut down a computer chip production line at its Fujimi factory in Nagano Prefecture within the next three years. It will then turn the plant into a research and development base, unifying computer chip production operations at its Sakata plant in Yamagata Prefecture, Kubota said.

Its subsidiary, Epson Imaging Devices Corp., will close an LCD plant in Gifu Prefecture within this year and shift the unit’s headquarters functions from Nagano Prefecture to Tottori Prefecture, where another of its LCD plants is located.

But Kubota emphasized the realignment of computer chip and LCD production facilities is unlikely to lead to any cuts in regular jobs.

“Our main objective is to concentrate our limited business resources on areas where we are strong,” he said.

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