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Tesla supplier Panasonic seeks to balance US and Chinese markets in tech war

Panasonic will aggressively pursue growth in both the U.S. and China as Tesla suppliers tighten cash controls to weather the headwinds of technology disputes between the world’s two largest economies.

In an interview with the Financial Times, CEO Yuki Kusumi said after two years of trying to make his business more agile, the Japanese conglomerate had built up a huge slump across car batteries, air conditioners and microwave ovens. It also said it would review its business portfolio to streamline it. Cost effective.

“It’s true that the separation of the United States and China has become a bigger challenge for us,” Kusumi said, adding that the company has decided to change the way it produces automotive battery materials in the United States, which it used to source in China. I added that I am considering it.

“But the US and China are both major markets with steady growth,” he said. “Both markets are important to us, and we make each of these businesses less susceptible to political influence.”

The United States is a particularly important market. panasonicis the car battery business. The Japanese group operates his $5 billion Gigafactory in Nevada with electric car maker Tesla.

Panasonic plans invest $4 billion to build a factory in KansasKusumi said the decision was bolstered by the recent passage of U.S. President Joe Biden’s Inflation Reduction Act, which includes $369 billion in incentives to fund clean energy efforts.

Yuki Kusumi, president of Panasonic, said, “It is true that the decoupling of the United States and China has become a major issue.” © Eri Sugiura/FT

The Kansas plant will be partially funded from 400 billion yen ($3 billion) set aside by Panasonic to invest in growth areas such as EV batteries, supply chain software and air conditioning over three years through March 2025. There is a possibility. Develop hydrogen fuel cells and other new technologies.

But Panasonic has also made aggressive bets on expanding its home appliances and refrigeration systems in China, where local management is given autonomy over its operations, as opposed to other regions. .

Kusumi said the company may try to sell Chinese-made products in Asian markets that are not applicable. US export controls Designed to sabotage Beijing’s access and ability to develop advanced semiconductors.

“Frankly, I’m not optimistic about market conditions next year,” Kusumi said, noting that the bleak outlook will make Panasonic’s divisions more cautious about managing inventories and accelerating the conversion of earnings into cash flow. He added that the need would increase.

In late October, Panasonic cut its full-year operating profit forecast by 11% to 320 billion yen. Acquired for $7 billion 2021 years.

As Kusumi tries to lead Panasonic into its next stage of growth, geopolitical challenges are emerging. Since taking over as Chief Executive Officer in April 2021, he has shelved a major restructuring of non-core assets and has turned the Group around to focus on its environmental transition efforts.

He also shifted Japanese groups Transition to a holding company structure Instill financial discipline and drive faster decision making. According to Kusumi, these efforts have revealed which departments are more competitive and which lag behind despite reforms during his tenure.

Some analysts have criticized Panasonic’s sprawling portfolio for a lack of focus and warned that many of its businesses are susceptible to macroeconomic cycles.

“We plan to move to a new form of portfolio management, not just carve-outs,” Kusumi said, adding that it will recapitalize some of its business units.

https://www.ft.com/content/10ae18ae-9306-4b90-9e31-0174df4e09db Tesla supplier Panasonic seeks to balance US and Chinese markets in tech war

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