Panasonic Reportedly Plans To Sell Three Chip Plants To Israel's TowerJazz

(RTTNews) - Japanese consumer electronics giant Panasonic Corp. (PCRFY) plans to sell three semiconductor plants in Japan to Israeli chipmaker Tower Semiconductor Ltd. (TSEM), which operates under the brand name TowerJazz, as part of its efforts to divest money-losing operations, Nikkei reported Wednesday.

As per the report, Panasonic will spin off these plants into a new company as early as this fiscal year, and will sell a majority stake in the new firm to TowerJazz.

Located in Toyama and Niigata prefectures, the chip plants in Japan had a combined book value of 42.2 billion yen or $416 million as of March 31.

It is expected that TowerJazz would expand the plants' customer base and utilize more of their capacity. Most of the 2,500 workers at the plants would be employed at the new company, with the rest transferred to other operations, the report said.

Panasonic is also in talks to divest chip assembly plants in locations such as China, Indonesia and Malaysia to a Singaporean company.

In the last fiscal year, Panasonic's semiconductor business suffered a 20.5 billion yen operating loss on sales of 184 billion yen. The company reportedly is moving ahead with plans to halve the segment's workforce of roughly 14,000.

In October, Panasonic decided to stop production of plasma television panels by March 2014 and fully exit the business. The company has also decided to pull out of consumer smartphones in the Japanese market.

Despite poor performance in digital consumer related business, the company recently lifted its full year forecast, citing anticipated sales growth in stable housing & automotive businesses,

Panasonic shares closed today's trading at 1,167 Japanese yen, up 39 yen or 3.46 percent.

Tower Semiconductor shares closed Tuesday's trading at $4.31, down $0.03 or 0.69 percent.