Sharp Corp, Japan's biggest maker of liquid-crystal displays for televisions and mobile phones, plans to double spending on semiconductor equipment to boost production of image sensors and memory chips used in camera-phones.
Sharp will invest ?27 billion (US$242 million) on chip manufacture in the year ending March next year, compared with ?13 billion in the current year, Sharp vice president Hiroshi Saji said in an interview at the company's Osaka headquarters. The investment will include a new production line making smaller flash memory chips able to store more photos and data.
Global spending on chipmaking equipment will rise 39 percent this year as demand rises for chips used in computers, digital cameras and mobile phones, trade group Semiconductor Equipment & Materials International predicted. Sharp needs to boost spending to ensure its chips offer the latest features.
"Sharp wants to invest in camera sensors because demand is strong," said John Yang, an equity analyst at Standard and Poor's rating service. "The sensor market may yet saturate and Sharp's share valuation is high, so extra spending may trigger a negative stock move."
Net income at Sharp almost tripled last year as the company benefited from surging sales of flat-screen televisions using its liquid crystal display panels. The company also needs to assure competitiveness in other fields, Saji said.
"Sharp wants to be at the cutting edge of technology in the flash memory business," said Saji. "Camera-phone demand continues to exceed our ability to supply" parts, he said.
Sharp will spend ?9 billion, compared with ?3 billion in fiscal 2003, to increase capacity for camera sensors at its main chip factory in Fukuyama in Hiroshima prefecture, western Japan.
"Several billion yen" will be spent to introduce a new production line in Fukuyama to make flash memory, Saji said.
The line will use silicon wafers of 300-millimeter, or 12-inch diameter, to produce chips with circuits that are 90 nanometers wide.
Production of some semiconductor products will be contracted out to cut costs because the company is focusing on liquid crystal displays, said Saji. The company will spend ?130 billion on LCD production in the next business year.
Sharp must avoid the "diverse risks" of investing heavily both in semiconductors and LCDs, said Saji.
Some flash memory production will be contracted to so-called foundries such as UMC Japan, the Japanese unit of Hsinchu, Taiwan-based United Microelectronics Corp (
Sharp may also outsource the making of some products to Renesas Technology Corp, Saji said.
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