Matsushita will make camera chips in Singapore

Matsushita Electric Industrial Co, which makes consumer electronics under the Panasonic brand, will produce semiconductors for digital cameras in Singapore, the first time such products will be manufactured outside Japan.

Matsushita Electric, the world's largest maker of consumer electronics, said it will spend S$50 million (US$29 million) to start production of the chips, known as charge-coupled devices, which are in demand because of the popularity of digital cameras and cell phones that incorporate cameras.

Matsushita Electric, one of four makers of the digital camera chips, all of which are Japanese, said it is setting up production in Singapore to be closer to customers who are moving assembly lines to countries such as China and Malaysia.

Demand for the chips outstrips supply, said Matsushita vice president Yukio Furuta.

"It is really tremendous growth that we anticipate," Furuta said at a press conference in Singapore. "The market is growing so fast."

Matsushita Electric shares fell ?1 to ?1,489 as of 1:50pm in Tokyo. The shares have risen 27 percent this year.

The Osaka-based Matsushita Electric aims to double sales of charge-coupled devices in the year ending March to almost ?40 billion (US$342 million).

In Singapore, the company will test, assemble and ship the chips, originally manufactured in Japan. Matsushita Electric, which was the first chipmaker from Japan to open a plant in Singapore 24 years ago, plans to add about 400 workers to its semiconductor workforce of 738 in the next three to five years as it raises production.

Digital camera chips will account for 30 percent of semiconductor production for Matsushita Electric in Singapore within five years. The unit generated sales of S$238 million last fiscal year.

Matsushita Electric's move is good news for the electronics sector in Singapore, which accounts for 50 percent of the country's manufacturing and has been losing out on new investments from companies such as Maxtor Corp, which is building a new factory in China.

Singapore's government said last month that investment in new factories and equipment will fall to S$7.5 billion this year, less than its S$8 billion target. Spending reached S$9.01 billion last year.

Matsushita will also spend S$100 million to expand production of chips for DVD and CD players, and will shift manufacturing of less-advanced chips made in Singapore to Indonesia and Malaysia.