Panasonic to sell remaining stake in semiconductor joint venture in face of ‘aggressive’ competition

03 Dec

Panasonic has announced it’ll be selling off its minority stake in its semiconductor joint venture for $ 250M to Taiwan’s Nuvoton Technology Corp after deciding it would need to invest more than it is prepared to do to compete and expand in the market.

Back in 2014, Panasonic offloaded a majority of its semiconductor unit to a joint venture with Isreali semiconductor manufacturer TowerJazz. The joint venture, which is owned 51% by TowerJazz and 49% by Panasonic, was initially believed to be sold as a whole, but TowerJazz has since confirmed in a statement that it will retain its majority stake and ultimate control of the operation following the transition:

‘TowerJazz, the global specialty foundry leader, clarifies following recent press releases in connection with the sale of Panasonic semiconductor business to Nuvoton that it will not sell its TPSCo shares and will maintain its 51% ownership and Board control in TPSCo.’

Part of the semiconductor business is involved with making imaging sensors for cameras and smartphones, as well as for numerous industrial purposes. It isn’t clear at the moment exactly how this will impact the company’s camera division or the upcoming 8K organic sensor planned for the 2020 Olympics, but all intellectual property and contracts are to be transferred to the buyer in June next year — a month before the start of the Olympics.

Panasonic says it’s tried to streamline its semiconductor business and that it has divested parts of the business already to make it less expensive to operate, but that it would need much more investment to expand the division and to compete in an aggressive market.

The sale may not have very much effect at all as the majority of Panasonic’s Lumix cameras use third-party sensors, and the majority of sensors made by the division being sold were for the automotive business and industrial applications. However, the division lists 16MP CMOS sensors for stills cameras and 20MP Super 35mm sensors for broadcast cameras in its offering. Whether the technology and manufacturing facilities for the 8K organic sensor are also part of the deal we have yet to discover.

We have contacted Panasonic for comment and to clarify what this might mean, if anything, for its camera business. We will update the article if we receive a statement.

Press release:

Announcement of the Transfer of the Semiconductor Business

OSAKA, Japan – Panasonic Corporation (hereinafter, the “Company”) announced that it will transfer (hereinafter, the “Transfer”) the semiconductor business mainly operated by Panasonic Semiconductor Solutions Co., Ltd. (hereinafter, “PSCS”), which is a 100% consolidated subsidiary company of Panasonic Equity Management Japan G.K.(hereinafter, “PEMJ”), a 100% consolidated subsidiary company of the Company, to Nuvoton Technology Corporation (hereinafter, “Nuvoton”), a Taiwan-based semiconductor company under the umbrella of Winbond Electronics Corporation group, and enter into the Stock and Asset Transfer Agreement (hereinafter, the “Agreement”) with this company. A decision was authorized by the Board resolution today.

1. Background and Purpose
The semiconductor business of the Company has shifted from the AV area to the automotive and industrial area over the last few years. The Company has positioned the “Sensing” technologies such as image sensors, and the “LiB Application” technologies such as IC for battery management and MOSFET for LiB battery circuits protection as the focus areas, and the Company has aimed to grow its business by consolidating resources in these areas.

In the meantime, in April 2014, the Company transferred the semiconductor wafer production process of the Hokuriku Plants (Uozu, Tonami, Arai) to the joint venture company formed with Tower Semiconductor Ltd., an Israel based foundry company. Furthermore, in June 2014, the Company transferred its semiconductor assembly plants in Singapore, Indonesia and Malaysia to UTAC Manufacturing Services Ltd. (hereinafter, “UTAC”) having its headquarter in Hong Kong. The Company has been strengthening its competitiveness by becoming an asset-light company, consolidating and eliminating its offices and production bases in both Japan and overseas for the mitigation of business risks.

However, the competitive environment surrounding the semiconductor business has become extremely severe due to aggressive expansion of competitors, huge investments in the focused area, and industry reorganization through M&A. In such an environment, the Company has come to believe that the even stronger business operation and the continuous investment is critical in order to achieve a sustained growth and expansion of the semiconductor business. Accordingly, it has concluded that the best option would be to transfer the business to Nuvoton, which highly appreciates the Company’s accumulated technical and product capabilities and therefore has a potential to lead stable growth by leveraging those capabilities.

2. About the Transfer
(1) Business restructuring before the Transfer: Just prior to the Transfer, the Company will restructure the semiconductor business as follows.

  • All shares of Panasonic Industrial Devices Systems and Technology Co., Ltd. (hereinafter, “PIDST”) and Panasonic Industrial Devices Engineering Co., Ltd. (hereinafter, “PIDE”), which are wholly-owned subsidiaries of PEMJ, will be handed over to PSCS by way of company split.
  • The semiconductor business-related intellectual property rights and certain business contracts held by the Company and/or the Company’s subsidiaries and the semiconductor business-related assets and debt of the Company will be handed over to PSCS by way of either company split or asset transfer.
  • All PSCS’s shares held by PEMJ will be handed over to a to-be-established, wholly-owned subsidiary of PEMJ (hereinafter, the “PSCS Holding Company”) by way of share transfer.
  • The semiconductor-related components (lead frame) business of PSCS will be handed over to a to-be-established, wholly-owned subsidiary of PEMJ by way of company split.

(2) Details of the Transfer: Upon completion of the business restructuring above, the Transfer will be carried out as per the details below with target effective date of June 1, 2020 (scheduled).

  • PEMJ will transfer all PSCS Holding Company’s shares to Nuvoton.
  • The business of Panasonic Industrial Devices Semiconductor Asia (an in-house company in charge of development and sales of semiconductors; hereinafter, “PIDSCA”) under Panasonic Asia Pacific Pte Ltd. (a Singaporean entity owned by the Company through its subsidiary; hereinafter, “PA”) will be handed over to Singapore- based entity owned by Nuvoton.
  • Certain facilities and inventories attributable to the semiconductor business of Panasonic Semiconductor (Suzhou) Co., Ltd. (hereinafter, “PSCSZ”) will be transferred to China-based entity owned by Nuvoton.

3. Other
The Agreement is based on the precondition of obtaining approvals from the authorities responsible for competition laws and other government agencies of the respective country and region. In addition, the planned date of the Transfer including business restructuring before the Transfer may differ significantly in light of the duration required for completing the procedures for obtaining approval and other procedures concerning permissions etc.

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