According to Nikkei, Sony and TSMC plan to begin mass production of next-generation image sensor semiconductors as early as 2029 in Kumamoto Prefecture in southwestern Japan.

Production will be handled by a joint venture in which Sony holds approximately 60% and TSMC approximately 40%. Total investment is expected to reach approximately 1 trillion yen (US$6.3 billion).

Basic Protocol

Japanese and Taiwanese companies reached a basic agreement in May to collaborate on the research and development and production of next-generation image sensors. Specific details of the collaboration are still under discussion.

Sony and TSMC are expected to reach an agreement on large-scale production investments in the near future and establish a joint venture before the end of fiscal year 2026 (i.e., before the end of March 2027).

This joint venture is expected to supply high-performance camera sensors for Apple's iPhones. Looking ahead, the two companies aim to improve sensor performance, enabling artificial intelligence systems to more accurately identify objects, targeting the emerging field of "physical AI," i.e., AI-controlled robots and vehicles.

Sony declined to comment. TSMC stated that it has no new information to add beyond the collaboration with Sony announced in May.

The joint venture plans to build a large-scale R&D facility and production line within Sony Semiconductor Solutions' image sensor factory in Koshi City, Kumamoto Prefecture. Sony and TSMC are also currently discussing potential government subsidies with Japan's Ministry of Economy, Trade and Industry.

The planned 1 trillion yen investment is equivalent to approximately four years of capital expenditure for Sony Group's semiconductor business. It also comes close to TSMC's total investment of $8.6 billion in its first wafer fab in Kumamoto.

The Koshi plant is located about 30 kilometers from the epicenter of the earthquake that struck Kumamoto in July, but suffered no major damage.

Kumamoto Prefecture possesses abundant water resources, crucial for semiconductor manufacturing, and relatively easy access to low-cost electricity from renewable energy sources such as geothermal and solar power. Both Sony and TSMC have stated their intention to continue investing in semiconductor production in Kumamoto Prefecture in the medium to long term.

Sony holds more than half of the global CMOS image sensor market share. Competitors, including China's OmniVision and South Korea's Samsung Electronics, are striving to catch up through aggressive investments. By partnering with TSMC, the world's leading advanced semiconductor manufacturer, the Japanese company hopes to further expand its technological lead.

It is expected that Sony will not disclose certain proprietary manufacturing technologies crucial to its survival in the image sensor field to TSMC. TSMC hopes to deepen its expertise in this field through closer collaboration with the market leader, aiming to strengthen its position in the emerging field of physical artificial intelligence.

As AI applications rapidly expand, demand for advanced semiconductors is expected to continue to outpace supply.

Meanwhile, aggressive investments by major chipmakers are driving up the cost of semiconductor manufacturing equipment. Sony plans to improve capital efficiency by sharing investment costs with TSMC.

Sony President and CEO Hiroki Totoki described the collaboration with TSMC as "a first step towards a lightweight fab model," in which Sony minimizes its ownership of manufacturing assets.

For TSMC, this collaboration also represents a way to expand its manufacturing scale beyond cutting-edge chips.

In Taiwan, TSMC is actively investing in the production of advanced 2nm and 3nm chips. In chip manufacturing, smaller nanometer dimensions generally result in more complex and powerful chips. By investing in Japan and utilizing Japanese government subsidies, TSMC aims to diversify its production bases and mitigate geopolitical risks.

View more at EASELINK