TOKYO (AFP) -- Japan's Sanyo Electric Co. said Wednesday that it had decided against a sale of its semiconductor business as part of its efforts to return to the black after three straight years of losses.

The ailing electronics maker decided to retain the semiconductor unit ""as a key operation"" in its component and device division, a company statement said.
""Sanyo will continue to take measures to expand and develop this business,"" it added.
The announcement rattled investors, with the price of Sanyo Electric shares plunging 14 yen or 7.1 percent to 182 by the lunch break.
Sanyo had reportedly been negotiating with Japanese buyout firm Advantage Partners over a possible sale of the chip business.
The fund had offered to buy the unit for 110 billion yen (940 million dollars) and was granted priority negotiating rights, according to the Nikkei business daily.
But with global credit conditions tightening, the Advantage Partners failed to raise enough capital to buy the business, it said.
Sanyo is struggling to return from the red amid fierce price competition. A scandal over alleged window dressing of its accounts has only added to its woes.
After suffering an annual net loss for the past three years, Sanyo is increasing its focus on rechargeable batteries, which have been a bright spot in its otherwise lackluster recent performance.
Sanyo is also negotiating with Japan's Kyocera Corp. on a possible sale of its mobile telephone manufacturing business.
The Osaka-based Sanyo, which started out making bicycle lamps after World War II, has been accelerating its restructuring with thousands of job cuts as part of efforts to stem its large losses.
Last year, Sanyo issued 2.6 billion dollars' worth of new shares to Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking, which together took five of the nine seats on the company's board.