Sony earmarks $1.14 b for microchips

TOKYO: Japan's Sony Corp said on Monday it would spend $1.14 billion next year to build next-generation microchips with narrower circuitry on new production lines using 300mm silicon wafers.

The spending is part of the electronics and entertainment giant's three-year semiconductor investment plan announced in April that aims to manufacture key devices in-house to lift profitability at its mainstay electronics division.

"Through these investments in semiconductors that will be at the heart of future digital consumer electronics, we believe we can differentiate our products from the competition," Sony spokeswoman Harumi Asai said.

The bulk of Sony's latest investment for the coming business year starting April 1 will go toward top-notch production lines for a high-powered microprocessor code-named "cell" that Sony is developing with Toshiba Corp and IBM.

Analysts expect the chip to power Sony's next-generation game console, but the company aims to make "cell" the global standard for consumer electronics in the high-speed Internet era.

Sony plans to make investments to upgrade to state-of-the-art 65-nanometer circuitry, allowing chips to be more powerful and smaller, on larger 300 millimeter (12-inch) silicon wafers.

Last month, Matsushita Electric Industrial Co, maker of Panasonic brand products, said it planned to spend 130 billion yen over the next two years to build a plant for customized high-end chips used in DVD recorders and other devices.

Sony said it would spend 53 billion yen to upgrade its plant in Isahaya, Nagasaki, in southwest Japan, 36 billion yen on a U.S. plant run by IBM in East Fishkill, New York, and 31 billion yen on Toshiba's factory in Oita, also in southwest Japan.

MORE CHIPS IN-HOUSE

Toshiba said on Monday it would also provide 42 billion yen to upgrade manufacturing equipment at the Oita plant.

The three production plants, to have a combined monthly capacity of 15,000 of the 300mm wafers, will start test production in early 2005, Sony said.

When Sony unveiled the semiconductor investment plans in April, President Kunitake Ando said he aimed to more than double the number of chips it procures from within the Sony group.

Ando said at the time that Sony procured about 20 percent of its annual one trillion yen worth of chips from within the group.

Semiconductors account for more than half the value of Sony's PlayStation 2 (PS2) game console and the company has been pushing to incorporate more of the game division's microchip expertise into its electronics products.

In December, the company unviled the PSX, a DVD/hard disk drive recorder combined with a PS2, that is powered by the same 90-nanometer semiconductor that powers the game console.

© Reuters