Mitsubishi Electric said it plans to exit its loss-making...

Mitsubishi Electric said it plans to exit its loss-making mobile phone business, becoming the latest Japanese electronics maker to withdraw from a market dominated by overseas giants such as Nokia.

In the face of tough competition from Nokia, Samsung Electronics, and other global suppliers that enjoy economies of scale, many Japanese cell phone makers have withdrawn to the domestic market in recent years. Sanyo Electric said in January that it would sell its loss-making cell phone business to Kyocera. "This is a logical step for Mitsubishi Electric after having been unable to launch a hit model for a while," IDC analyst Michito Kimura said. "But the withdrawal of these two Japanese cell phone makers is not going to make things better for those still in the industry." With mobile phone demand stagnant at home, more Japanese makers are likely to pull out or merge, analysts said. Mobile phone service operators such as NTT DoCoMo are cutting subsidies to retailers to keep cell phone prices low and are instead reducing their monthly rates, discouraging handset users from replacing their handsets frequently. The company said Monday it expected a one-off loss of about $164 million (17 billion yen) on a pretax level for the year ending on March 31 due to the withdrawal. The Tokyo-based company said, however, that the loss is likely to be offset by improved operational efficiency in other businesses.