Jan. 9--OSAKA -- Panasonic Corp. said Friday it plans to slash investment in plants under construction in Hyogo Prefecture for manufacturing panels for flat-screen televisions by 135 billion yen as the global economic downturn has eroded demand.

The Osaka-based Japanese electronics maker originally planned to spend a total of 580 billion yen on the plants in the cities of Amagasaki and Himeji, western Japan.

Despite the investment cut, Panasonic aims to boost sales of flat-screen TVs by 50 percent from the previous year to 15.5 million units in fiscal 2009 starting April by putting emphasis on emerging markets among other measures.

Given deteriorating business environments due to the global economic slump, Panasonic President Fumio Otsubo said at a press conference in Osaka the company is likely to fail to achieve its earnings targets for fiscal 2008 in four key business areas -- digital audio, products designed for comfortable living, automotive electronics, and semiconductors and other devices.

Panasonic now plans to withdraw from operations that have been incurring losses since fiscal 2006 and close about 20 overseas operation bases, he said without elaborating on details.

"We have to clearly define the businesses to grow and those to close," Otsubo said.

Panasonic slashed investment in the Amagasaki plant, which is scheduled to start operation in May to manufacture panels for plasma TVs, from the originally planned 280 billion yen to 210 billion yen.

It lowered investment in the Himeji plant being constructed by IPS Alpha Technology Ltd., a Panasonic subsidiary, to produce liquid crystal display panels from 300 billion yen to 235 billion yen.

Operations at the plant are planned to begin in January 2010.

The decision to cut back on investment in TV panel factories comes at a time when the firm plans to turn Sanyo Electric Co., a leading rechargeable battery and solar cell maker, into a subsidiary through a tender offer with the aim of expanding its green businesses.

The deal with Sanyo will create Japan's largest electrical machinery maker, matching Hitachi Ltd. in terms of sales.

Otsubo said it has become "extremely difficult" for the company to achieve its medium-term business plan called GP3, under which it aims to boost sales from 10 trillion yen in fiscal 2009. For fiscal 2008, the company expects to book 8.5 trillion yen in sales.

"The current situation is not just that an economic slowdown is taking place," Otsubo said, adding that the electronics industry is facing a drastic structural change with a global recession, demand shrinkage and the shift to lower-priced products.

To combat such a business environment, Otsubo said, "We will make fiscal 2009 a year for thoroughly implementing structural reforms, strengthening corporate health, and planting seeds for future growth."

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