Japanese camera maker Nikon is shutting down its compact digital camera factory in China, as an increasing number of people are now using smartphones to take pictures.
Nikon officials announced that they would halt operations at their Jiangsu Province facility on Monday.
Nikon posted a net loss at the end of the fiscal year in March, its first in 7 years.
Nikon officials stress that they will shift their focus to high-value-added products.
The Camera and Imaging Products Association says shipments of compact digital cameras exceeded 100 million units in 2010.
But last year, the number had dropped to around 12.5 million, due to the increasing popularity of smartphones.
Nikon’s sales of compact digital cameras are expected to decline 28% this fiscal year.
Nikon plans to shutter a digital camera factory in China as increasingly sophisticated smartphone cameras undercut the market for cheaper compact models.
The Japanese precision equipment manufacturer will make an official decision at a board meeting Monday. The Jiangsu plant, which employs 2,500 workers, turns out entry-level compact digital cameras and interchangeable lenses for single-lens reflex cameras. Some production will be outsourced and Nikon will continue to sell cameras in China, where it controls nearly 30% of the market.
The global market for compact digital cameras has shrunk to a tenth of its peak within the past decade, and the Jiangsu facility’s operating rate has declined as Nikon’s sales of basic compacts continue to slide. The company expects to sell 4.8 million digital cameras overall in the year ending March 2018, down 24%. For the compact segment, sales are projected to drop 28%. Nikon will focus more on SLR and other higher-end models with an eye toward improving profitability.
Nikon also makes cameras in Thailand and Japan. The reconfiguration of production bases is part of structural reforms begun last November, when the company scrapped its medium-term business plan as the digital camera and chipmaking equipment segments struggled.