Tesla supplier Panasonic to cut costs to support shift into AI

Tesla supplier Panasonic to cut costs to support shift into AI


PANASONIC Holdings is considering an overhaul of personnel and trimming underperforming businesses to lower fixed costs, part of a shift into more lucrative areas such as powering AI data centres.

The Osaka-based company, whose sprawling operations include hairdryers, PCs and lithium-ion batteries used by the likes of Tesla, will restructure or streamline businesses with low growth potential, according to a statement released on Tuesday (Feb 4). It said it will also make changes to its employment structure.

One target may be the company’s long-standing TV operations.

“There may be other options besides a sale,” chief executive officer Yuki Kusumi said told reporters on Tuesday (Feb 4), after saying he couldn’t comment on whether the company would sell its TV business. “A part of me can’t help but get sentimental about our TVs.”

The company plans to boost 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 that push will involve consolidating the company’s many production, sales and logistics bases, Kusumi said, adding that executives were discussing how wide-ranging any personnel overhaul should be.

Kusumi has been pushing for greater changes at the company, which was founded in 1918. Panasonic will integrate artificial intelligence technology across its operations and team up with Anthropic to boost AI-related revenue, he said in a recent interview. One area that the company has been targeting is data centres’ growing need for high-efficiency and heat-resistant components and materials.

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“Panasonic could grow profit on generative AI. Panasonic could achieve its sales and operating profit targets for fiscal 2025 ending March. Operating profit in 4Q could remain high, after climbing 4 per cent in 3Q. Its energy division operating profit could rise due to battery demand from data-centre customers, while production efficiency can improve in its US factory,” said Masahiro Wakasugi, senior industry analyst for Bloomberg Intelligence.

“Industry-division profit could increase due to robust demand for electronic parts and materials for generative AI. Lifestyle-division profit could stabilise due to cost control, while Panasonic’s connect unit profit could also be stable due to cost-management capabilities, including Blue Yonder’s supply chain solutions.”

Once a global leader in consumer electronics, Panasonic is now a key battery supplier to Tesla. It’s seeking to expand in software, while fighting for relevance in appliances and industrial devices. In the December quarter, Panasonic reported a 4 per cent rise in operating profit, helped by its lifestyle segment, which includes household appliances such as microwaves and vacuum cleaners, and its energy segment.

The maker of automotive-use batteries has been one of the beneficiaries of former US President Joe Biden’s Inflation Reduction Act, which provided tax credits to battery factories in the US. Panasonic, which produces batteries in Nevada with expansion plans in Kansas, does not foresee a cancellation of those tax credits under President Donald Trump. BLOOMBERG



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