Sony now looks at its Silicon roots

Edmund Klamann

TOKYO: Sony Corp, which gained global fame nearly 50 years ago with its first

big semiconductor product - the transistor radio - is returning to its silicon

roots, says Tsugio Makimoto, a senior executive in its chip business.

Sony ranks an unremarkable 19th in the global chip market despite its status

as the world's biggest maker of audio/visual products. But Sony's chief

technology officer Makimoto, said in a recent interview, that it aimed to reach

the top 10 by 2005.

"I think in the last two or three years our current chairman, Nobuyuki

Idei, and others have realized more and more that semiconductors will definitely

grow more important in the future. Perhaps our history has returned to its

origins," he said. Fuelling this renewed interest, he said, is the rise of

digital products that use chips to change electronic signals into sound or

pictures, or to link up with the Internet.

"Just as digital consumer electronics are coming on stream, there's once

more an awareness of how important semiconductors are," he said.

Before joining Sony last October, 40-year veteran of Japan's chip industry

Makimoto, had spent his entire career at electronics conglomerate Hitachi Ltd,

including a lengthy stint on the board of directors. During his final year, he

also headed an industry group looking at viable means to revitalize Japan's

semiconductor sector.

Last decade



Makimoto said that when his industry group issued its report in March 2000,
he had come to believe that it was the consumer electronics giants that would

restore the status of Japan's semiconductor industry after being dominated by

personal computers and non-Japanese companies such as Intel Corp.

"What I had in mind was that Sony and Matsushita would take a leading

role in the semiconductor industry. With digital consumer products, there's a

new era in which everyone has new opportunities," he said. He said Sony was

hoping to build its semiconductor business into a one trillion yen ($8 billion)

operation by 2005, compared with 400 billion yen on a non-consolidated basis in

the business year that ended on March 31.

"At the very least I'd think that would put us in the top 10," he

said. Driving Sony's growth would be the vast and increasing use of chips in

consumer electronics, he said. Sony used about one trillion-yen worth of

semiconductors last year in its products, with about 20 percent supplied

in-house.

As more of its products go digital, the company expects its use of

semiconductors to double or triple by 2005, and aims to boost the percentage of

chip production. Sony and Matsushita Electric Industrial Co Ltd, perennial

rivals for the top spot among the world's consumer electronics makers, have been

forging alliances with Japan's big chipmakers to bolster their semiconductor

capabilities.

In May, Sony announced a deal with Toshiba Corp, Japan's biggest chipmaker

and a Hitachi rival, to jointly develop chip processes using ever-narrower

widths of 0.10 micron or less. Shrinking chip designs, with the current

cutting-edge standard soon set to move from 0.18 micron to 0.13 micron, will be

a key means of cutting power consumption, thus lengthening the battery life of

portable electronic gadgets.

Sony Computer Entertainment Inc, a subsidiary that makes the PlayStation2

game console, had already been working with Toshiba to make processing and

graphics chips, and in April the two unveiled an alliance with International

Business Machines to develop a high-performance chip for next-generation

machines.

Hitachi, on the other hand, has joined up with Matsushita, announcing an

alliance last month to develop digital consumer electronics. Company officials

said their collaboration might expand to include joint chip design.

(C) Reuters Limited 2001.