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Panasonic to sell 3 Japan plants to Israel

The three aging plants had a combined book value of $416 million as of 31 March.

Panasonic logo is displayed outside of the Panasonic Centre building, the company's showroom in Tokyo on 10 May, 2013. Picture: AFP

TOKYO - Panasonic Corp will sell its three main chip plants in Japan to Israel's TowerJazz, people with direct knowledge of the matter said on Wednesday, as the electronics giant wraps up a multi-billion-dollar restructuring drive.

The sale is expected to happen before Panasonic closes its books on the current financial year next March, the sources said, without giving an anticipated value for the deal.

Under President Kazuhiro Tsuga, Panasonic has been paring back unprofitable operations, including TVs and smartphones, after it lost a combined $15 billion in the two years to March this year. Semiconductors are the last major area where the company is retrenching.

TowerJazz, a foundry that makes chips on a contract basis for other firms, has a semiconductor plant in western Japan purchased from a Japan unit of Micron Technology Inc, in addition to factories in Israel and the United States.

Panasonic aims to give TowerJazz control of three plants and is also in talks with another unidentified company to sell the remaining five plants in Indonesia, Malaysia, Singapore, the sources said.

Panasonic and TowerJazz are currently negotiating the size of the stake and the transfer of the factories' 2,500 workers, the sources added, declining to be named because the information was not yet public.

Panasonic's chip business has racked up losses of over $20.6 billion in the latest financial year due to a scaling back of its consumer electronics divisions. The company will continue to procure chips from the plants after the takeover by TowerJazz, the sources said.

Panasonic has earmarked close to $170 billion in restructuring outlays this year as it shifts its focus from consumer goods to industrial businesses such as automotive electronics, an increasingly attractive sector for Japan's electronics makers.

Consumer electronics peers Sony Corp and Sharp Corp have also grappled with losses as they confront fierce competition from South Korea's Samsung Electronics Co and LG Electronics.

With the sale of the chip plants, Panasonic will halve its semiconductor-segment workforce to around 7,000 by the business year to March 2015, one of the sources said.

Shares in Panasonic rose 3.5 percent to their highest close in nearly three years on the news, which was first reported in the Nikkei business daily.

Panasonic said nothing had been decided. TowerJazz declined to comment.