* U.S. ON Semi and Sanyo plan to complete deal by yr end
* No layoffs planned for time being, Sanyo execs to stay
* ON Semi to boost capital investment, push sales abroad
(Adds details, comments throughout)
By Isabel Reynolds and Kentaro Hamada
TOKYO, July 15 (Reuters) - Japan's Sanyo Electric 6764.T is to sell its loss-making chip unit to ON Semiconductor(ONNN.O) for about 33 billion yen ($373 million), turning its focus to environmentally friendly technology, it said on Thursday.
The companies plan to complete the combined cash and stock transaction by the end of the year, executives told a news conference in Tokyo.
Sanyo, majority owned by Panasonic Corp (6752.T), plans to refocus by pouring $1.8 billion into its rechargeable battery and solar cell businesses over the next three years.
With its ninth acquisition in a decade, Arizona-based ON Semiconductor, spun off from Motorola Inc MOT.N in 1999, expects to become a top 20 global player, CEO Keith Jackson told reporters.
The U.S. firm will try to turn Sanyo Semiconductor profitable by investing in new equipment and pushing sales in Europe and the United States to make use of spare capacity at Sanyo, CEO Keith Jackson said in an interview.
"We've already said that we expect this to be not just profitable, but accretive for ON Semiconductor within the first year," Jackson said in the interview.
No layoffs are planned for the time being and Sanyo Semiconductor's management will stay in place.
The world's No.1 rechargeable battery maker, Sanyo is a small player in the global chip market, but its semiconductor unit is strong in analog chips, especially for visual and audio products.
Analog chips, a majority of which are power management chips, are used in products that involve data such as electrical input, sound waves and pressure, which cannot be broken into ones and zeros -- the stuff of digital signals.
Sanyo Semiconductor, which employs about 8,260 workers, including those at fully-owned subsidiaries, made a 7.1 billion yen loss in the year to March 2010, helping to push Sanyo into a loss for the year.
"Quite apart from the price, it is a good thing for Sanyo to get rid of businesses it is not planning to focus on," said Mitsushige Akino Chief Fund manager at Ichiyoshi Investment Management Co Ltd, noting that the deal was part of a trend towards greater focus in Japanese industry
Last month Fujitsu Ltd (6702.T) and Toshiba Corp (6502.T) said they would merge their mobile phone businesses in October to create Japan's second largest cellphone maker. [ID:nSGE65F0J1]
In October last year, Toshiba Corp took over Fujitsu's hard drive business. [ID:nT191221]
ON Semiconductor, which has about 13,000 employees globally, competes with Texas Instruments Inc TXN.N, Intersil Corp (ISIL.O) and Fairchild Semiconductor International Inc FCS.N and acquired California Micro Devices for $113 million in cash in January.
The pace of its acquisitions is likely to slow as it digests the current deal, Jackson said.
"In the near term, this is a very significant transaction and of course it's cross-cultural as well. So the difficulties are quite a few. I would expect us to slow down in our progress in acquisitions and take a long pause, because it will take us a while to optimize the situation," he said.
(Editing by Elaine Hardcastle)