Business / Corporate

Panasonic to sell loss-making chip business to Taiwanese firm: source

Kyodo

Panasonic Corp. will sell its chip business to Taiwan’s Nuvoton Technology Corp. as it steps up efforts to pull out of loss-making operations and focus more on growth areas, the firm announced Thursday.

The electronics manufacturer will sell its shares in Panasonic Semiconductor Solutions Co., based in Kyoto Prefecture, and TowerJazz Panasonic Semiconductor Co., a Toyama Prefecture-based joint venture it set up with Israeli firm Tower Semiconductor Ltd., Panasonic Corp. confirmed.

The sale comes after Japanese chip manufacturers — once global leaders — have struggled in recent years in the face of fierce competition from South Korean and Taiwanese rivals.

The decision also reflects Panasonic’s efforts to boost cost-cutting measures, to make up for sluggish sales in China amid the country’s prolonged trade war with the United States.

The company said last week it would cut back in another unprofitable business area, withdrawing from all production of LCD panels by 2021.

Under its three-year business plan starting April this year, Panasonic aims to reduce costs by ¥100 billion ($913 million), saving ¥30 billion by slashing personnel costs and ¥40 billion by exiting money-losing businesses.

The company entered the semiconductor market through a joint venture with Dutch electronics maker Koninklijke Philips N.V. in 1952. It boosted sales of chips for use in TVs in the 1990s to 2000s, but has since lost ground to its Asian rivals.

Panasonic CEO Kazuhiro Tsuga said earlier this month that the company would “eradicate” all continuously loss-making businesses by the fiscal year ending March 2022. The company would focus on sectors such as batteries and other equipment for cars, he added.

In July, the firm said it would close a television production site in Mexico amid low profitability.

Panasonic expects to report a decline in sales and group net profit for the first time in three years in the current fiscal year through next March.

It projects its group net profit will fall 29.6 percent from a year earlier, to ¥200 billion for the current business year ending March, and has forecast sales to slip 3.8 percent, to ¥7.7 trillion.