Panasonic Corp (6752.T) plans to dramatically cut back on chipmaking, slashing the business's 14,000-strong workforce by half and possibly selling some plants, the Nikkei said.
Japanese companies are spinning off their chipmaking operations as profit margins shrink, mainly due to stiff competition from South Korea, the paper said.
The move underlines Panasonic President Kazuhiro Tsuga's determination to weed out weak operations as he focuses on higher-margin products to end years of losses at the consumer electronics conglomerate.
Panasonic has chip production plants in Japan's Toyama and Niigata prefectures, as well as in China, Indonesia, Malaysia and Singapore, the Nikkei said.
The job cut will likely affect mainly foreign plants, the paper said.
Expenses resulting from the workforce reduction are expected to reach 50 billion yen ($514 million) for the year ending March, the paper said, adding the company expects to soften the impact of this through improved earnings.
Panasonic's chipmaking business reported an operating loss of 184 billion yen in fiscal 2012, the paper said.
The company is in talks to sell some plants to Israeli chip manufacturer TowerJazz (TSEM.TA), the business daily said.
Reuters reported earlier this month that Osaka-based Panasonic will pull out of its plasma TV business by the end of the financial year.
Panasonic agreed last month to sell the healthcare business to U.S. private equity firm KKR & Co (KKR.N) in a $1.67 billion deal.
(Reporting By Sneha Banerjee in Bangalore; Editing by Maju Samuel)