The restructuring plan has made clear that Matsushita has decided to adopt Linux for its digital consumer products and mobile phones. For now, "We've halted Symbian-based development and want to concentrate on Linux," said Yoshiaki Kushiki, president of Panasonic Mobile Communication Corp., Matsushita's mobile phone unit. Linux is expected to soon provide smooth connections to coming mobile networks

The reorganization includes suspension of GSM production and related overseas R&D centers, resulting in as many as 1,400 job cuts, or nearly half of Panasonic Mobile's overseas employees.

"The restructuring is not business contraction, but aims to prepare for rolling back in the next transition from 3G to 4G that will come around in 2008 to 2010," said Yoshiaki Kushiki, president of Panasonic Mobile.

Panasonic Mobile is the second largest Japanese supplier after NEC. It was the eighth-ranked global supplier last year.

Panasonic Mobile recorded a ¥8.9 billion (about $74 million) operating loss last fiscal year. The first half of this fiscal year ended in September with a loss of ¥1.9 billion (about $17 million), mainly due to poor GSM business in Europe and China.

Panasonic holds about about 30 percent of the world 3G market, a spokesman claimed.

In shifting its focus to developing a Linux-based global platform, Panasonic Mobile will cease R&D based on the Symbian OS in the United States. A U.K. research facility which has been developing software for GSM and UMTS will now develop its global platform for mobile phones based on Linux for 3G and the next-generation phones.

Panasonic Mobile has been offering Linux-based 3G handsets as NTT Docomo's 3G Foma handsets. Matsushita and Panasonic Mobile intend to establish a Linux-based global platform on which it can develop mobile phones for the global market.

The Linux-based platform will be implemented on the UniPhier semiconductor development platform. Matsushita said it intends to develop all its SoCs for digital consumer products on the UniPhier platform. UniPhier integrates hardware with the middleware level so that IP and middleware can be reused to lower the cost and shorten development time.

Linux will provide a standard software development environment. Panasonic Mobile plans to introduce 3G mobile phones with a DTV tuner next spring. The handset will be the first powered by the UniPhier chip.

Panasonic Mobile produces phones at its Shizuoka plant in Japan, in the Philippines and in China. In line with the decision to withdraw form GSM business, the Philippines plant and mobile handset lines at a Czech plant will be closed. The China plant will continue operation but will shifts production to future handsets.

The plants and the R&D center will be closed from February to May.