Panasonic Semiconductor Components Suzhou Factory Closed, Accelerating Transformation and Exit

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Recently, a netizen posted a certificate of termination of the labor contract with Panasonic Semiconductor Components (Suzhou) Co., Ltd. on the Internet. The certificate showed that the original open-ended labor contract was terminated on October 31, 2021.

What is going on? On November 13, a reporter from China Business News visited the Suzhou High-tech Zone, which is known as the first "Japanese investment hotspot" in the Yangtze River Delta region. Panasonic Semiconductor Components (Suzhou) Co., Ltd., which had set up a factory there for more than 20 years, has been closed down and its business has been merged into other Panasonic factories in Suzhou. Employees have received compensation and can be transferred to other factories if they wish.

It is understood that Panasonic has a total of 15 companies in Jiangsu Province, 9 of which are located in Suzhou High-tech Zone. Another Panasonic company near Panasonic Semiconductor Components (Suzhou) Co., Ltd., Suzhou Panasonic Semiconductor Co., Ltd., was recently renamed Panasonic Automotive Electronics Systems (Suzhou) Co., Ltd., transforming into automotive electronics.

Panasonic entered the semiconductor industry in 1952 and became one of the top ten semiconductor companies in the world in 1990. With the bursting of the economic bubble and the rise of new semiconductor companies represented by South Korea and Taiwan, Japanese semiconductor companies have declined. At the end of November 2019, Panasonic announced its withdrawal from the semiconductor industry and focused on becoming a supplier of semiconductor equipment and materials. The ups and downs of Panasonic's semiconductor business have also witnessed the rise and fall of the Japanese semiconductor industry to a certain extent.

A few days ago, the reporter went to Panasonic Semiconductor Components (Suzhou) Co., Ltd. and not only did he not see any employees coming in or out of the company, he also did not hear the sound of machines running in the factory.

A security guard of the company told reporters that the factory has been closed and no one is coming to work. "It is going to merge with other factories. They were settling accounts and merging in March this year. Many people have already left." It is understood that Panasonic has 15 companies in Jiangsu Province, 9 of which are located in Suzhou High-tech Zone.

The security guard also said that Panasonic gave employees a severance pay. Many old employees who had worked here for more than 20 years received at least 200,000 to 300,000 yuan in compensation. Some employees followed the company to other nearby factories. After the liquidation of equipment and other items, the factory will most likely be transferred to another company.

Panasonic Automotive Electronics Systems (Suzhou) Co., Ltd. is the closest Panasonic factory to Panasonic Semiconductor Components (Suzhou) Co., Ltd., and the former was previously named Suzhou Panasonic Semiconductor Co., Ltd. The company's security guard told reporters that the new company name was just replaced in October. Qichacha shows that Suzhou Panasonic Semiconductor Co., Ltd. changed its name to "Panasonic Automotive Electronics Systems (Suzhou) Co., Ltd." in late September.

On October 21, Panasonic Automotive Electronics Systems (Suzhou) Co., Ltd. in Suzhou High-tech Zone held a ceremony to celebrate its 20th anniversary and to start mass production of new sonar products and the construction of an intelligent logistics center. Last year, while focusing on the research and development and production of automotive electronics-related products, the Suzhou Panasonic factory introduced sonar products.

It is understood that Suzhou Panasonic Semiconductor Co., Ltd., located on Lushan Road, Suzhou High-tech Zone, was established in 2001. It covers a total area of ​​more than 130,000 square meters and has approximately 3,000 employees. It is an important production base for Panasonic's automotive camera modules, automotive microphone modules and semiconductor products.

He Kangji, general manager of Suzhou Panasonic Semiconductor Co., Ltd., once said that after years of development, Suzhou Panasonic Semiconductor has shifted from its initial consumer goods to the automotive industry, and then to products involving automotive automation, new energy batteries, and autonomous driving.

Regarding Panasonic's transformation, Wang Lifu, an analyst at semiconductor research firm ChipMotion, said: "The Japanese strategy is very conservative, and the actual decision-making is very cautious about expanding production. This is a very old-fashioned approach."

However, looking at the world, Japan has been in the first echelon of the world's semiconductor industry for a long time, especially between 1980 and 1990, when Japanese semiconductors reached their peak. According to a report by research firm Gartner, six of the top 10 semiconductor companies in the world in 1990 were from Japan, such as NEC, which ranked first, and Toshiba, which ranked second.

It is understood that Panasonic established a joint venture with Philips in 1952 and officially entered the semiconductor field. Around 1990, Panasonic's semiconductor business sales ranked among the top 10 in the world. Its business model is mainly based on IDM (design, manufacturing, and packaging in one). Its main businesses include discrete devices, high-voltage process chips (power management chips, automotive electronic chips, etc.), image sensors, etc., all of which are special processes.

However, due to the economic bubble in Japan, huge debts caused the competitiveness of Japanese companies to begin to decline. With the rise of semiconductor newcomers represented by South Korea and Taiwan, Japan's semiconductor industry gradually went downhill.

In order to save their performance, many Japanese companies had to start self-rescue and stop losses. For example, Hitachi, Mitsubishi, and NEC integrated their semiconductor businesses to form Renesas Electronics, and Toshiba sold its semiconductor subsidiary.

Seeing the continued deterioration of its semiconductor business, Panasonic has been committed to restructuring its loss-making business for many years. As early as 2013, due to the loss of its semiconductor business, Panasonic decided to cut half of its semiconductor department staff in fiscal 2014 and sell its overseas companies and some domestic factories.

At the end of November 2019, Panasonic announced that it would withdraw from the semiconductor business and agreed to sell its semiconductor business-related factories, facilities and shares to Taiwan-based microcontroller manufacturer Nuvoton Technology Co., Ltd. Last September, Nuvoton Technology announced on its official website that it had completed the acquisition of Panasonic's semiconductor business (Panasonic Semiconductor Solutions., Co. Ltd., referred to as PSCS).

At that time, the industry believed that Panasonic's sale of its semiconductor business was of symbolic significance, meaning that Japan would end its leading position in chip manufacturing at the end of the last century, and industry giants such as Panasonic would become suppliers of semiconductor equipment and materials, mainly serving semiconductor companies in China and South Korea.

Wang Lifu said: "We have sold out everything that should be sold. We used to have discrete devices, etc., and now we have even sold our own packaging factories. Panasonic has basically withdrawn from the semiconductor circle." And with Panasonic's withdrawal, the structural adjustment of Japan's semiconductor industry will also come to an end.