PSP production outsourced?

Sony Computer Entertainment president Ken Kutaragi has confirmed that PSP production may be outsourced as consumer demand for the handheld continues to rise and a European launch approaches, according to a report on Bloomberg.

"We have to somehow increase our production capacity as we're not prepared to start selling in Europe, we've run out of units in the US and it's still selling well in Japan," Kutaragi told Bloomberg.

"We're making the key components here, but we're looking to expand assembly of the product outside of Japan,'' he continued, adding that Taiwan and China are being considered as two possible options.

But according to Taipei newspaper the Commercial Times, Taiwanese company Hon Hai Precision Industry has already picked up the contract. Hon Hai currently manufactures PS2 consoles for Sony and the newspaper claims that PSP production is due to commence in the third quarter of this year. Neither Sony nor Hon Hai were available for comment.

At present, there is only one factory producing PSP consoles - the Kisarazu facility east of Tokyo, which manufactures around one million units per month. Sony has previously announced plans to double this figure by the summer as it continues the fight to compete with Nintendo. The success of the Game Boy SP and Nintendo DS consoles have gained Sony's rival a 90 per cent share of the Japanese handheld market.

The PSP launched in Japan last December and in the US back in March. The European release has slipped several times, with Sony citing hardware shortages as the cause, and the handheld is currently set for a September 1 launch.