[Matsushita Electric will stop manufacturer of GPRS Panasonic branded handsets for overseas markets and focus on next-generation Linux-based handsets.]

Osaka, Japan -- Matsushita Electric Industrial Co., Ltd. announced that one of its subsidiaries, Panasonic Mobile Communications Co., Ltd. (Panasonic Mobile), will phase out overseas 2.5G GSM mobile terminal operations due to severe global competition. By concentrating resources into next-generation mobile terminal technologies, as well as unifying platforms and core technologies for the Japanese and overseas markets, Panasonic Mobile aims to improve development efficiency and product competitiveness. Sales and service activities for the current GSM products will continue.

In line with this decision, the following initiatives will commence from January 2006:

(1) In order to concentrate resources into the development of common core technologies and next-generation mobile terminals, Panasonic Mobile's global R&D structure will be reorganized.

Panasonic Mobile will accelerate the development of a global platform based on the Linux * Operating System (OS) that is now being used in mobile terminals for the Japanese market. Furthermore, the Linux OS-based platform will be integrated into Matsushita's newly developed system LSI, resulting in the establishment of global platforms through integrating core technologies for wireless modem and AV processing. In this way, Panasonic Mobile will further strengthen technological foundations for next-generation mobile terminal development on a global basis, as well as reinforce its mobile terminal business in Japan.

By focusing on the development of a Linux OS-based global platform, Panasonic Mobile will close R&D operations at Panasonic Mobile Communications Development Corporation of U.S.A. (PMCDU) in the United States, which has been developing other OS platforms. In addition, R&D operations at Panasonic Mobile Communications Development of Europe Ltd. (PMCDE) in the United Kingdom will concentrate on the development of 3G and next-generation technologies such as wireless modems and platforms.

(2) With the phasing out of GSM mobile terminal operations, Panasonic Mobile will reorganize its overseas manufacturing facilities.

Panasonic Mobile Communications Corporation of the Philippines (PMCP), where mainly GSM terminals have been produced will be closed. The GSM manufacturing in the production lines at Panasonic Mobile & Automotive Systems Czech, s. r. o. (PMACZ) in the Czech Republic will be discontinued. GSM manufacturing at Panasonic Putian Mobile Communications Beijing Co., Ltd. (PMCB) in China will shift to 3G mobile terminal production.

* Linux is a registered trademark of Linus Torvalds.

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