TOKYO -- Sony Group on Thursday confirmed it is considering a plan to join with Taiwan Semiconductor Manufacturing Co. in building a chip factory in the western Japanese prefecture of Kumamoto.
The confirmation came during a news conference to announce Sony's first-half earnings. "The stable procurement of semiconductors is a crucial issue amid the chip crunch, and TSMC's plant could be a solution," said Hiroki Totoki, the company's chief financial officer.
He also said Sony will continue to hold discussions with TSMC and Japan's Ministry of Economy, Trade and Industry regarding the matter, and that the company is considering whether to share its knowledge of operating a chip plant in Japan with TSMC. Sony and TSMC are also discussing how the companies can deepen their partnership, Totoki said.
Earlier this month, TSMC, the world's biggest contract chipmaker, announced it is preparing to build its first-ever chip plant in Japan. Construction would begin next year, and plans are for production to get underway in 2024, the company said.
The move comes after COVID-19 sped up digital transformation around the world, driving demand for more chips. The Japanese government has voiced its support for the project and plans to offer a multiyear aid package. Bringing TSMC's chip plant on shore has also been a goal for Japan in terms of economic and national security.
The cost of the project is estimated to be around 1 trillion yen ($8.8 billion). Nikkei previously reported that Sony will jointly invest in the plant.
Sony is TSMC's biggest Japanese client. The new plant will be located in Kumamoto, on land near a chip factory owned by Sony as the conglomerate aims to secure stable procurements of semiconductors for image sensors used in smartphones.
Sony controls around 50% of the global market for image sensors used in smartphones. The company is also trying to broaden the scope of its business by leveraging its CMOS image sensor technology and has been accelerating business expansion in areas like electric vehicles and smart city development.
The same day, Sony revised up its annual earnings forecast for the second time this year, saying on Thursday that it expects a record operating profit of over 1 trillion yen ($9.1 billion) for the year ending March 2022.
The company anticipates operating profit to increase 9% from a year ago. Previously, it had expected a 3% rise to 980 billion yen.
Sony also revised its annual net profit outlook to 730 billion yen. It trimmed its profit decline from a year earlier to 29% -- previously Sony predicted net profit to drop 32% this year. The company increased its revenue outlook by 200 billion yen to 9.9 trillion yen, up 10% from a year earlier.
The iconic company last year enjoyed a surge in gaming revenue due to pandemic-driven demand, logging a then record operating profit of 971 billion yen. Sony anticipates operating profit for this fiscal year to surpass that mark on the back of strong sales of TVs and other electronics. A rise in music streaming revenue as well as sales from its anime business will support the upward trajectory.