Tesla supplier Panasonic to cut costs to support shift into AI

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Panasonic to Realign Business, Cut Underperforming Units

Company Aims to Boost Profit by 150 Billion Yen by March 2027, 150 Billion Yen by March 2029

Panasonic Holdings is planning to overhaul its personnel and trim underperforming businesses to reduce fixed costs, as part of a shift towards more lucrative areas such as powering AI data centers.

Restructuring and Cost Cuts

The Osaka-based company, which has a diverse range of operations including hairdryers, PCs, and lithium-ion batteries used by the likes of Tesla, plans to restructure or streamline businesses with low growth potential, according to a statement released on Tuesday. The company will also make changes to its employment structure.

TV Operations May Be Next

One area that may be targeted for restructuring is the company’s long-standing TV operations. "There may be other options besides a sale," said CEO Yuki Kusumi, who also expressed sentimental attachment to the TV business.

Boosting Profit

The company aims to increase its profit by more than 150 billion yen (S$1.3 billion) by March 2027 and add a further 150 billion yen by March 2029. Part of this push will involve consolidating its many production, sales, and logistics bases, Kusumi said.

Integration of AI Technology

Panasonic is also pushing to integrate artificial intelligence technology across its operations and team up with Anthropic to boost AI-related revenue. One area the company has been targeting is the growing need for high-efficiency and heat-resistant components and materials for data centers.

Industry Expert Opinion

Masahiro Wakasugi, senior industry analyst for Bloomberg Intelligence, believes Panasonic could grow its profit on generative AI and achieve its sales and operating profit targets for fiscal 2025. He predicts that the company’s energy division operating profit could rise due to battery demand from data center customers, while production efficiency can improve in its US factory.

Conclusion

Panasonic’s efforts to realign its business and cut underperforming units are aimed at boosting profit and increasing competitiveness in the rapidly changing tech landscape. As the company shifts its focus towards more lucrative areas such as AI data centers, it remains to be seen whether its efforts will pay off and help the company achieve its targets.

Frequently Asked Questions

Q: What does Panasonic plan to do with its underperforming businesses?
A: The company plans to restructure or streamline businesses with low growth potential.

Q: What is Panasonic’s goal for profit increase?
A: The company aims to increase its profit by more than 150 billion yen (S$1.3 billion) by March 2027 and add a further 150 billion yen by March 2029.

Q: How will Panasonic achieve its profit goals?
A: The company plans to achieve its goals through cost cuts, consolidation of production, sales, and logistics bases, and integration of AI technology across its operations.

Angela Lee
Angela Lee
Director of Research

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