The company also said it expects a loss for the year in contrast to its previous estimate that it would make a profit.
Toshiba's rivals in Japan are facing similar tough times.
Fujitsu is trimming 16,400 jobs, or 9 percent of its work force, mostly overseas jobs. NEC Corp. has said it will cut 4,000 jobs by next March in an effort to turn around its computer chip division.
Hitachi is also expected to decide on job cuts, Japanese media reported. Matsushita Electric Industrial Co., makers of the Panasonic brand, is trying to trim several thousand jobs in its group through voluntary early retirement.
Toshiba said almost all its job cuts will be in Japan, where it will reduce its work force by 12 percent from 144,000. It employs 188,000 workers worldwide.
Toshiba's move is unusual because it involves such a large number of domestic jobs. It is generally difficult to get rid of unneeded workers in Japan because major companies are accustomed to providing lifetime employment.
We tackled the jobs in Japan because we must increase overseas production, Toshiba president Tadashi Okamura told reporters.
Japanese manufacturers have been moving production to cheaper overseas plants. Of the 20,000 workers in Japan affected under Toshiba's revival plan, set to be completed by March 2004, about 10,000 will be eliminated through natural attrition.
The rest will be through voluntary early retirement and transfers of group workers to outside companies, Toshiba said. The job cuts total 17,000 because new workers will be added.
Mami Indo, an analyst with Daiwa Institute of Research in Tokyo, said Toshiba sorely needed the job cuts.
This time, the company is finally tackling the problem it wasn't able to touch upon in the past, Indo said. But how Toshiba will start achieving growth remains to be seen.
Toshiba did not give details on where the job cuts will come. The company is considering streamlining operations at six plants in Japan, including plant closures, he said while refusing to elaborate.
Toshiba said it will take a $1 billion charge for the restructuring efforts for this fiscal year. It will spend $500 million this fiscal year on early retirement and other personnel programs to shrink its work force, it said.
It is now predicting losses of $958 million for the fiscal year ending in March 2002, down from the previous forecast of a profit of $500 million.
Toshiba said it was taking a serious blow from the downturn in the demand for semiconductors and other electronics devices. But Okamura said it was hoping for a turnaround in the market by 2003.
The announcement came after the session ended on the Tokyo Stock Exchange. Toshiba shares rose 5.6 percent in Tokyo trading Monday.
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