TOKYO - Panasonic Holdings is pushing ahead with one of the most sweeping restructurings in its 108-year history, cutting about 12,000 jobs, selling major businesses and reorganizing operations as the Japanese electronics group seeks to build new sources of growth around artificial intelligence, data centers and recurring service revenue.
The group, which comprises 447 companies and employs more than 180,000 people, has increasingly shifted away from businesses it considers less central to its future while directing investment toward areas where it believes its technology can generate stronger and more sustainable returns.
President and Group CEO Yuki Kusumi said Panasonic still has substantial work to do despite a sharp rise in its share price over the past year.
Kusumi said the increase reflects investor expectations, but stressed that Panasonic has yet to fully justify those expectations through its business results. He said management also has a responsibility to deliver improvements following the difficult decisions imposed on employees through the restructuring.
The workforce reduction, announced in May last year, was initially planned at about 10,000 positions but ultimately grew to around 12,000 in Japan and overseas.
Kusumi said the objective was not simply to lower fixed costs through workforce reductions. Panasonic must strengthen its underlying competitiveness so that its businesses can compete directly with rivals and eventually return to sustained growth, he said.
The company has also accelerated its portfolio restructuring.
Panasonic Automotive Systems, which supplies automakers with navigation systems, displays and in-vehicle cameras, was sold two years ago to a group company of a U.S. investment fund.
Panasonic Housing Solutions, which produces kitchen, bathroom, toilet and interior products, was sold this year to YKK.
Panasonic has also consolidated domestic logistics facilities and reorganized operations across the group.
Kusumi said investors appear to have responded positively to progress in portfolio management, visible benefits from the restructuring and Panasonic's growing exposure to data-center investment.
One of the strongest areas is equipment and components for AI data centers.
Panasonic's involvement in data centers predates the current AI boom. Its business originally centered on backup power systems for conventional servers, but the spread of AI servers has created new requirements because graphics processing units consume electricity in highly variable patterns.
Panasonic's battery backup units can help smooth these fluctuations and reduce peak power consumption at the server-rack level.
There are broadly two approaches to backup power in a data center: providing backup for the entire facility or supplying backup individually to servers. Panasonic has focused on the latter distributed approach, using batteries at the server level.
The company also supplies capacitors that stabilize power around GPUs and electronic materials for circuit boards designed to reduce energy losses during high-speed operation.
Demand extends further into equipment used to manufacture these components, including mounting machines used by electronics manufacturing service companies and servo motors used in semiconductor-related production.
Kusumi said the largest opportunities currently lie in battery backup units, capacitors and electronic materials.
Panasonic did not fully foresee the scale of today's AI-related demand, he said, but the development was not sudden. As AI became increasingly practical, major hyperscale data-center operators gradually increased their investment, allowing Panasonic to work with customers as the market expanded.
Kusumi said safety and performance are critical differentiators.
A simple backup system could theoretically use many types of batteries, but the enormous cost of servers and data-center infrastructure makes reliability particularly important. Peak shaving, which smooths large swings in electrical current, also requires batteries engineered specifically for that purpose.
Panasonic designs batteries specifically for these applications, using chemical compositions and structures different from those used in electric-vehicle batteries.
As AI servers require even larger bursts of current, batteries alone may no longer be sufficient. Panasonic is therefore combining its battery expertise with its capacitor business to develop systems capable of meeting higher power demands.
Kusumi said this ability to combine battery technology, capacitors and other components distinguishes Panasonic from companies focused solely on power supplies.
The company also draws on expertise accumulated through its automotive battery operations and lessons learned from past battery safety incidents.
Panasonic's battery backup units combine battery cells with surrounding circuitry and are designed to fit directly into server racks.
Capacitors and other components used around GPUs are generally supplied not directly to hyperscale data-center operators but to companies assembling the systems. Demand can be generated when Panasonic components are incorporated into reference designs specifying how circuits should be arranged to ensure stable GPU operation.
For the immediate future, data centers will remain the primary growth driver in Panasonic's device businesses. Over time, however, the company expects AI processing to spread beyond centralized data centers to edge devices.
Kusumi pointed to physical AI applications such as robots and autonomous vehicles, where AI processing takes place on the machine itself rather than in a remote data center.
He said it remains too early to estimate the potential revenue from these applications.
Panasonic is also keeping open the possibility of renewed investment in electric-vehicle batteries if demand strengthens again.
Kusumi said the company will invest when customers make sufficiently firm commitments and when the expected return can be justified. The timing and scale of any renewed acceleration in EV demand remain uncertain, making disciplined capital allocation essential, he said.
Alongside AI-related growth, Panasonic is placing even greater strategic importance on what it calls its solutions businesses, which already account for roughly half of group sales.
Of approximately 8 trillion yen in group sales, about 4 trillion yen comes from the solutions area.
These operations combine essential hardware with maintenance, monitoring, software and other services intended to keep customers' businesses operating without interruption.
Panasonic has historically supplied equipment used in stores, manufacturing facilities and other commercial operations, supported by extensive service networks.
The company is now increasingly connecting equipment digitally so that it can monitor operating conditions, detect abnormalities, predict failures and control energy consumption remotely.
In cold-chain operations, for example, Panasonic can connect refrigerated display cases and monitor their condition remotely, providing services ranging from equipment management and failure prediction to energy-saving controls.
Kusumi said similar capabilities are accumulating across numerous Panasonic businesses.
Combining that expertise could allow the company to respond more rapidly to new customer and social problems, including labor shortages and rising energy costs.
AI agents could also become part of these systems, supporting equipment control, operational decisions and other functions.
Kusumi said Panasonic wants to apply AI directly within its solutions businesses rather than simply benefit from demand for AI infrastructure.
Unlike the rapid surge in demand associated with data centers, the solutions business is unlikely to expand suddenly. Kusumi nevertheless sees it becoming one of Panasonic's main earnings pillars through steady growth and improved profitability.
He said solutions businesses can also be relatively efficient in terms of capital requirements.
Using batteries as an example, Kusumi said the battery cells themselves account for only about 20% of the cost of a battery backup unit, meaning the investment efficiency of the finished BBU business can be substantially higher than that of producing EV battery cells alone.
He estimated the investment efficiency could be about five times higher than in EV batteries.
Battery-cell manufacturing still requires substantial capital expenditure, while many solutions businesses rely more heavily on assembly, software, expertise and existing customer relationships and therefore require less investment in new production facilities.
Kusumi said some businesses within the solutions segment already generate profit margins above 10%.
The objective is to raise overall profitability by combining hardware that anticipates customer needs with reliable service that keeps customers' operations running.
In many overseas businesses, maintenance and service activities already represent a significant source of profit.
Kusumi drew a distinction between Panasonic's data-center device business and its solutions operations.
For data centers, Panasonic largely sells hardware designed to prevent systems from stopping. In solutions businesses, the company maintains an ongoing relationship with customers to prevent their operations from stopping.
That continuing relationship creates opportunities for Panasonic to propose additional products and services over time.
In device businesses, the customer relationship begins earlier, often when Panasonic components are incorporated into product designs. Successful performance can then lead to Panasonic's products being selected again for the next generation of equipment.
Another major element of Panasonic's solutions strategy is Blue Yonder, the U.S. supply-chain software company it acquired as part of an effort to expand recurring revenue.
Kusumi said Panasonic's solutions operations had historically relied heavily on one-time hardware sales.
Supply-chain management software offered a different model because customers continue paying for the service after implementation, providing Panasonic with recurring revenue.
The company also saw the possibility of eventually linking Blue Yonder's supply-chain software with Panasonic hardware deployed in factories, warehouses and other operating environments.
The broader goal is to help customers keep products moving smoothly through supply chains while reducing unnecessary inventory.
Kusumi acknowledged, however, that Blue Yonder's software architecture was outdated when Panasonic acquired the company.
To build a genuine recurring-revenue business, Panasonic concluded that the software needed to operate as a cloud-native system in which customers could continuously receive updated and improved functions.
The company therefore decided to rebuild key parts of Blue Yonder's software, particularly its core supply-chain planning systems.
That work consumed much of the first three years after the acquisition and delayed some of the synergies Panasonic initially hoped to achieve.
Blue Yonder subsequently announced a new cognitive solution that uses multiple AI agents to communicate with one another while optimizing supply chains.
Kusumi said customer reaction has been strong and that Blue Yonder's sales pipeline is growing.
Although Panasonic has yet to fully spread Blue Yonder's expertise across the wider group, Kusumi said the acquisition has greatly strengthened its ability to build AI-powered solutions.
He said he believes Blue Yonder now possesses one of the strongest capabilities in its field and could become a central engine for future growth in Panasonic's solutions businesses.
Panasonic has at times faced criticism over the effectiveness of its acquisitions, and Kusumi acknowledged that its record includes both successful and less successful deals.
But he said that after making a large investment, management must focus both on making effective use of the acquired business and recovering the capital invested.
For Panasonic's broader transformation, Kusumi said the ultimate task comes down to developing people and giving them opportunities to use their abilities.
The restructuring has reduced costs and reshaped the group's portfolio, but Panasonic's next challenge will be proving that those changes can produce lasting growth.
With AI infrastructure providing a near-term boost and solutions businesses offering the prospect of steadier recurring revenue, Panasonic is attempting to shift from a sprawling electronics manufacturer toward a group built around specialized technology, services and long-term customer relationships.
Source: テレ東BIZ
