GS said: "Sony Computer Entertainment has begun outsourcing part of its PlayStation Portable's production to Taiwan electronic parts maker Hon Hai Precision Industry Co., reports Reuters. According to a representative at SCE, Hon Hai has already begun production of PSP parts in China's southern city of Shenzhen starting this month.

Up until now, SCE produced the PSP at its fabrication lab located in Chiba prefecture, near Tokyo. By outsourcing a part of its production to China, the company aims to lower costs and to make its operations more flexible. A spokesperson from SCE confirmed the possibility that most of the PSP's production may be transferred over to China in the future. Hon Hai has a stable relationship with SCE, as the company also produces units of the new slimline PlayStation 2.

Sony announced during its first quarter report that production of the PSP during the current business year will be raised from the previously scheduled 12 million units to 13 million units. The company released the next-generation handheld in Japan last December, followed by the North American release in March. The PSP will be released in Europe on September 1. "