Panasonic to sell three Japan chip plants to Israel's TowerJazz: Sources

Japan's Panasonic Corp will sell its three main domestic semiconductor factories to Israel's TowerJazz as early as the current business year ending in March, sources with direct knowledge of the matter said, bringing the embattled electronics giant closer to completing an overhaul of its loss-making businesses.

Under President Kazuhiro Tsuga, Panasonic has been streamlining unprofitable enterprises, including televisions and smartphones, and semiconductors are the last major remaining area to complete a round of restructuring. Panasonic aims to split the three chip factories out and have TowerJazz take control, the sources said on Wednesday, declining to be identified because the information is not public yet. The companies are negotiating the size of the stake and transfer of the factories' workers, one of the sources said.

Selling off plants

The three chip plants in Japan, with about 2,500 workers, have been fully depreciated and had a combined book value of 42.2 billion yen as of March 31. Panasonic said nothing had been decided. Officials at TowerJazz's headquarters could not immediately be reached.

Panasonic is also in talks with another company to sell its five overseas chip assembly plants in Indonesia, Malaysia, Singapore, and two in China, the sources said. They did not identify the potential buyer. Panasonic has earmarked 170 billion yen in restructuring outlays this year as its consumer electronic operations, like those of Sony Corp and Sharp Corp, reel under fierce competition from South Korea's Samsung Electronics Co and LG Electronics.

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So far this business year, Panasonic has announced an exit from plasma TVs and smartphones for domestic retail consumers, even as it raised its earnings forecast this month on strong sales of products like batteries to industrial clients. With the sale of chip plants, as well as early retirement offers and transfers to other operations, Panasonic will halve its semiconductor-segment workforce to around 7,000 by the business year to March 2015, one source said. Shares in Panasonic rose 3.2 percent on the news, which was first reported in the Nikkei business daily on Wednesday.

Reuters