Japanese consumer electronics giant Panasonic Corp on Thursday announced that it would sell its loss-making semiconductor unit to Taiwan’s Nuvoton Technology Corp for $250 million as the company struggles to lift its profit amid a lack of growth drivers.
Panasonic Corporation said it would transfer the semiconductor business, mainly operated by Panasonic Semiconductor Solutions Co Ltd, a 100 per cent subsidiary of Panasonic Equity Management Japan GK, which in turn is a 100 per cent subsidiary of Panasonic Corporation, to Nuvoton Technology Corporation, a Taiwan-based semi-conductor company, under the umbrella of Winbond Electronics Corporation group, and enter into a stock and asset transfer agreement.
The sale is part of Panasonic’s plans to cut fixed costs by 100 billion yen ($920 million) by the year ending in March 2022 by consolidating production sites and overhauling loss-making businesses.
Panasonic has already divested most of its chip business as it lost to more nimble Korean and Taiwanese rivals, and has shut down or shifted its manufacturing facilities to its joint venture (JV) with Israel’s Tower Semiconductor.
Its semiconductor unit currently focuses on designing power-management chips and sensors for smartphones, cars and security cameras. It sold part of the power management chip business to Japan’s Rohm Co this month.
The latest deal includes the sale of the entire JV, which is 51 per cent owned by Tower and 49 per cent by the Panasonic chip unit. The JV operates three Japanese chipmaking facilities.
The transaction is subject to obtaining approvals from competition authorities and other government agencies of the respective countries and regions, the company said, adding that the planned date and mode of transfer, including business restructuring before the transfer may differ depending on the duration and procedures before the transfer.
Panasonic said the sale will not have any significant impact on its earnings. The value of the deal that Panasonic has announced excludes the amount Nuvoton would pay for Tower Semiconductor’s stake in the joint venture.
Nuvoton said in a statement the all-cash transaction was expected to close by June 2020, and would “increase Nuvoton’s presence in the global semiconductor industry through greater scale and volume of semiconductor solutions”.
Nuvoton, which was spun off from Winbond Electronics Corp in 2008, supplies chips for electronic devices, including computers and audio products.