Sony Corp. is set to begin formal talks to buy a chip plant from Renesas Electronics Corp. to increase production of smartphone image sensors, sources said.
Sony plans to begin due diligence next week, and the companies may not reach a final agreement, the sources said, asking not to be identified because the discussions are private. The company is increasing output of the sensors, which help phones take high-quality photos, as companies such as Apple Inc. buy Sony’s technology for use in their own devices.
Chief Executive Officer Kazuo Hirai is seeking to bolster profits as Sony struggles with falling demand for televisions and missteps with its Hollywood studio. While its smartphone business accounts for just 3.7 percent of global shipments, Sony has garnered almost a third of the $7.6 billion market for low-power sensors.
“Sensor demand is growing for smartphones,” said Tsunenori Ohmaki, an analyst at Tachibana Securities Co. “Sony is considering the acquisition of Renesas’ Tsuruoka plant to expand sensor production.”
The components are called complementary metal-oxide semiconductors, or CMOS chips, and are used in Xperia phones, Cyber-shot cameras and competitors’ products such as the iPhone.
Sony and Renesas will sign a memorandum as early as next week as they initiate talks over the plant in Tsuruoka, Yamagata Prefecture, another person with knowledge of the plans said.
Sony is deciding between purcha sing the Renesas plant and investing in its own chip factories, said this source, who asked not to be identified because the talks are private.
The company has said it plans to spend ¥60 billion this financial year on facilities for its chip operations, which get 77 percent of sales from image sensors.
Representatives for Sony and Renesas declined comment.
Sony may pay about ¥10 billion for the factory and retain 900 employees, the Nikkei reported Wednesday.
Sony’s brand name for its CMOS chip is Exmor, which acts as an eye for electronic products, capturing light to convert into electronic signals for processing. The latest chip uses less power and faster processing to catch vivid images under low light.
Renesas said in August it plans to close some plants in Japan in three years, including one in Tsuruoka.