Sony will start construction in November in the Kumamoto district on Japan's southern island of Kyushu. The factory is scheduled to begin production in October 2001.
The move is designed to meet rising demand for microchips required for components in cell phones, projectors, digital cameras and camcorders. Such components, including liquid crystal display (LCD) screens and charge-coupled devices (CCDs), have been in short supply recently.
Worldwide shipments of LCDs this year through 2005 will increase an average of 18 percent annually, according to IDC Japan, an affiliate of Massachusetts-based International Data Corp.
Sony expects to have a 60 percent market share in Japan's CCD market in the fiscal year that ends in March 2001, up from about 50 percent in the previous year.
The company plans to spend US$94 million to build the first stage of the factory by the end of March 2001 and will spend another US$847 million to complete the plant by March 2006.
The microchips will be used to boost the output of LCDs and CCDs produced at another Sony plant in the Kagoshima district, also on Kyushu. Sony plans to double LCD output at the plant to 1.7 million units per month once production reaches full capacity in 2005. That compares with the present output of 850,000 units each month. It will also double CCD output at the Kagoshima plant to 5.2 million units per month from the present figure of 2.6 million.
For the fiscal year that ends in March 2001, Sony and its group companies plan to spend US$2 billion on microchip operations. To finance that spending, Sony tapped the domestic bond market today by setting coupons and prices for two bond issues that will raise a total of US$1.4 billion.
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