Panasonic will close its lithium-ion battery factory in Beijing, China, resulting in 1,300 job cuts.
The plant manufactures batteries for simple mobile phones and digital cameras, which are facing stiff competition from sophisticated smartphones.
Panasonic spokeswoman Yayoi Watanabe was quoted by Reuters as saying: "The global market for these products has been shrinking."
Watanabe said employees were informed of the closure in late July.
Panasonic took over the factory from Sanyo Electric, which it acquired in 2010. The acquisition has, however, hurt the Japanese firm’s growth prospects due to competition from South Korean manufacturers.
The closure of the plant is part of Panasonic’s plans to focus on electric car batteries instead of consumer electronics such as plasma TVs and smartphones, where it faces tough competition from its rivals.
Panasonic recently said it would invest about $499.83m in its automotive business, which includes manufacturing lithium-ion batteries for Tesla Motors.
The company is due to assume 30% to 40% of the cost of Tesla’s $5bn Gigafactory facility in Nevada, US.