Mr Taizo Nishimuro, chairman of Toshiba, has joined the growing chorus of senior information technology executives predicting a recovery in the second half of next year. He also confirmed there was a strong possibility Toshiba would leave the D-Ram (dynamic random access memory) business.

"I think we have had the worst," Mr Nishimuro said. "Excess inventory will be depleted in the early part of next year and demand will recover."

Mr Nishimuro said the market should recover next year, if only because struggling manufacturers would be forced to close plants.

He said the current bail-out package for Hynix, the South Korean producer, would keep the company afloat for only three months.

However, further support for Hynix from the banks and government could be forthcoming.

In the clearest indication so far that Toshiba is close to a decision to leave the D-Ram business, he added: "We have no intention to wait for Hynix to go out. There is a good chance we might sell that (D-Ram) operation or close the operation down."

Infineon, the German semiconductor manufacturer, is understood to be a potential buyer for the D-Ram business. Mr Nishimuro made clear that Toshiba would continue to produce non- D-Ram chips.

But Mr Nishimuro admitted that Toshiba was suffering badly.

The company's D-Ram semiconductor business is making massive losses and its laptop computer division is reeling under a fearsome onslaught from Dell.

He said Toshiba also had major concerns about its ability to maintain its lead in laptops.

"Last year we were number one worldwide but this year it is doubtful we can make it," he said.

Toshiba is restructuring laptop production, marketing and supply chain management in an effort to compete with Dell more effectively.

Mr Nishimuro said the firm had much catching up to do, although he added that Toshiba was still making profits in its personal computer business, unlike most manufacturers.

Prices of Toshiba's D-Ram chips have fallen 90 per cent in the past year, and now cover just one-third of production costs.

Mr Nishimuro said the company would not pull out of the mobile phone business, even though he was very disappointed with the lack of growth in the market this year.

Toshiba would also continue to make consumer electronics such as televisions, which remain profitable in spite of increasing competition from South Korea and China.

But Mr Nishimuro said the time may come when Toshiba would have to outsource manufacturing of these products and simply sell them under its brand.

He said the company was in the process of reducing its 188,000- strong workforce by 20,000 through a voluntary retirement programme.