According to sources Panasonic plans to sell chip plants to Israel’s TowerJazz

According to a report from Reuters Panasonic Corp is planning to sell its three main Japanese chip plants to Israel”s TowerJazz, as the company looks to finalise a multi-billion-dollar restructuring drive. Sources at the company told the news agency that the sale is expected to happen before Panasonic closes its books on the current financial year next March.

The plants, which are fully depreciated, had a combined book value of 42.2 billion yen ($416 million) as of March 31 this year. Neither company has commented on the report.

Panasonic has been struggling with mounting losses over the past two years, losing $15bn in the two years to March 2013. In response company President Kazuhiro Tsuga has been paring back unprofitable operations, including TVs and smartphones and semiconductors are the last major area where the company is looking to retrench.

TowerJazz is a foundry that makes chips on a contract basis for other firms and has a semiconductor plant in western Japan purchased from Micron Technology. It also has factories in Israel and the United States.

According to sources Panasonic is looking to give TowerJazz control of three plants and is also in talks with another company to sell its remaining five plants in Indonesia, Malaysia, Singapore.

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 has yet to be made public.

Panasonic is spending heavily to restructure the business and to focus on industrial businesses such as automotive electronics, an increasingly attractive sector for Japan”s electronics manufacturers, while at the same time withdrawing from consumer oriented markets.

Panasonic has seen mounting losses in the consumer sector as a result of fierce competition from South Korea”s Samsung Electronics 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.

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