Dell Inc. said Thursday it will stop using California prison labor to recycle its computers, a move that comes a week after a Silicon Valley environmental group criticized the practice.

Dell, the nation's leading maker of personal computers, will switch to commercial recyclers instead of relying on prisoners at the Atwater federal penitentiary in Merced County.

In a report issued June 26, the Silicon Valley Toxics Coalition said prisoners dissembling computers with hammers and other tools risked exposure to hazardous materials. The toxics coalition also argued that employing low-paid prison labor undermines efforts to establish a thriving commercial recycling industry.

The report lauded Dell's archrival, Hewlett-Packard Co., for operating what the coalition called a model recycling program. HP dismantles computers in a partnership with Micro Metallics at a large facility in Roseville.

Dell spokesman Bryant Hilton said the company's decision was unrelated to the toxic coalition's report. He acknowledged, however, that Dell terminated its deal with Unicor, a division of the Federal Bureau of Prisons that operates the recycling program, by mutual agreement before the contract expired.

"We were happy with Unicor as a partner and we were confident their workplace standards were fine," Hilton said. "We've seen the costs charged by other vendors go down, so we decided to go with them. It's a business decision."

Unicor officials could not be reached for comment Thursday.

Dell will phase out Unicor over the next two months and transfer its recycling business to Resource Concepts Inc. of Dallas, and to Image Microsystems Inc., based in Commerce, near Los Angeles.

While Dell recycles only a modest amount of electronic waste annually, recycling advocates hailed the company's decision as significant.

"Dell isn't a big part of the recycling volume but (because of its size) it has a big influence on the direction recycling will take," said Sheila Davis, director of the toxics coalition's Clean Computers Campaign.

"We're definitely pleased with the change, that they will be using private partners who invest in infrastructure and local jobs," she said.

Mark Murray, executive director of the environmental group Californians Against Waste, said he opposes prison recycling because it doesn't encourage manufacturers to make products easier to recycle.

He said prisoners work slowly, breaking apart computers and other gear with small screwdrivers and hammers, with little regard for speed or efficiency. Such procedures, he said, don't encourage computer makers to design gear that can be easily dismantled and their components more readily salvaged.

"Unicor throws a huge amount of labor and zero technology at the problem," Murray said.

Dell's decision could step up pressure on other companies and government agencies that use Unicor to recycle electronics gear.

For instance, the state every month ships about 370 tons of computers and other e-waste to the Atwater prison for recycling. Ken Hunt, a spokesman for the state Department of General Services, which handles recycling contracts, said his agency is satisfied with its $225,000 contract with Unicor, which runs through March 2005.

However, he said the state is looking to find private recycling vendors.