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Toshiba Corp. said Wednesday it will end domestic production of mobile phones and shift to overseas outsourcing by October to cut costs amid shrinking demand for handsets.

The electronics giant will continue product development and design at its Hino factory in Tokyo, but all mobile phone production for the domestic market will be shifted abroad. Its 200 employees in charge of production at Hino will be reassigned to other divisions inside the company, it said.

Production of so-called smart phones for all markets meanwhile will continue to be carried out by its Chinese subsidiary, Toshiba said.

Japan has seen a double-digit annual decline in mobile phone sales after a new payment system encouraged customers to switch models less frequently in exchange for lower fees.

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