Panasonic’s components, including those related to artificial intelligence, have become the company’s top revenue generator in China and Northeast Asia, overtaking home appliances. The company is now positioning itself as an AI infrastructure provider.
In the fiscal year ending March 31, Panasonic’s China & Northeast Asia division reported total sales of 2 trillion Japanese yen (approximately $12.6 billion), with AI and other components representing 28% of that figure. Home appliances accounted for 27%, while residential equipment, industrial manufacturing tools, and new energy solutions made up 14%, 11%, and 3%, respectively.
During the first quarter of fiscal year 2026, Panasonic achieved record profits, driven largely by continued strong demand for AI-related products.
The company has been actively expanding its AI business and investing in China, focusing on components, solutions, and smart living technologies, according to the head of the China & Northeast Asia division. Compared to four or five years ago, AI-related business has now become the most significant source of revenue in China, surpassing traditional home appliance sales. Management has also prioritized AI as a key investment area for the next three years.
The rapid growth of AI computing infrastructure has allowed Panasonic to benefit early from this industry wave, further bolstering its expansion efforts in China.
The company’s China operations primarily target AI edge computing, AI infrastructure, and AI-driven manufacturing, which have contributed to approximately 30% year-over-year growth in the AI business this year. This surge in revenue is linked to soaring demand and tight supply for key electronic components—especially multilayer printed circuit boards used in AI servers and conductive polymer capacitors—while supply shortages have driven income increases.
Pricing for upstream PCB materials has been rising consistently since late last year, increasing between 5% and 20% every few months. Panasonic’s PCB materials can only passively reflect these price hikes, causing cost pressures to ripple along the supply chain and be absorbed by PCB and server manufacturers, eventually impacting AI cloud service providers.
Thanks to its diversified revenue streams, Panasonic’s profits from the PCB segment surged in the first quarter compared to the previous year.
The company operates electronic materials factories in Guangzhou, Suzhou, and Shanghai. Construction at the Guangzhou plant began in 2020 with a focus on 5G telecommunications technology; it started production in September 2023, coinciding with the explosive growth of AI. The Guangzhou facility is operating at full capacity but still faces shortages, while the Suzhou plant has developed substrates for semiconductor packaging, with mass production anticipated by year’s end. The Shanghai plant primarily produces materials for semiconductor packaging.
In China, Panasonic’s AI software division is also experiencing rapid growth. Its software development center in Dalian generated hundreds of millions of yuan (tens of millions of dollars) in software revenue within a year. The center focuses on developing software and services for AI products like smart home appliances, serving both domestic and international markets. Additionally, the center collaborates with Panasonic Energy to develop energy solutions for China’s robotics industry, handling software development for battery packs.