Sony puts $1.1bn chip on future
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Sony will pump more than $1 billion into silicon chip development in an effort to capture the global gadget market.
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TOKYO, Japan (Reuters) -- Sony Corp says it will spend $1.1 billion in the business year from April to build cutting-edge production lines for microchips to power a new generation of gadgets and establish it as the Intel Corp of the consumer electronics world.
The bulk of Sony's latest investment for the coming business year will go towards top-notch production lines for a high-powered microprocessor code-named "cell" that it 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.
Intel's microprocessors run four out of every five personal computers and some industry analysts have said "cell" could become the "Pentium" of the consumer electronics world.
The electronics and entertainment group will spend 120 billion yen in the new business year to make chips with narrower circuitry on new production lines using 300mm silicon wafers.
The spending is part a three-year, 200 billion yen semiconductor investment plan announced last 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.
Sony plans 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. A nanometer is one-billionth of a met re.
Last month, Matsushita Electric Industrial Co, maker of Panasonic brand products, said it will 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 will invest 53 billion yen to upgrade its plant in Isahaya, Nagasaki, in southwest Japan, 36 billion yen on the East Fishkill plant run by IBM in New York, and 31 billion yen on Toshiba's factory in Oita, also in southwest Japan.
Toshiba said Monday it will also provide 42 billion yen to upgrade manufacturing equipment at the Oita plant.
The three plants, to have a combined monthly capacity of 15,000 of the 300 mm wafers, will start test production in early 2005, Sony said.
When Sony unveiled the semiconductor investment plans last 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 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, it unveiled 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.
Prior to the announcement, Sony's shares fell 0.24 percent to 4,240 yen. The stock market's benchmark Nikkei average slipped 0.06 percent.
Copyright 2004
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
