Sony and Taiwan Semiconductor Manufacturing - In talks to outsource Sony's chip production

Taiwan Semiconductor Manufacturing Corporation(TSMC) got a visit from Sony Corportaion recently. Reports are floating around that Sony is looking at TSMC as a potential contractor for manufacturing their advanced microchips.

The outsourcing deal is driven by potential savings for Sony capital expenditures. So how much savings are we looking at? The equipment required to produce high volumes of system chips with circuitry widths of 45 nanometers or narrower are VERY expensive. To do this in house Sony would have to come up with over several billion dollars in capital.

Thats not the only driver. TSMC's system chip output volume is 10 times the volume of Sony's. This gives Sony a faster time to market, faster chips and the ability to produce more chips at a cheaper cost.

So why all the buzz about Nanochips? Well, a nanometer is one billionth of a meter. This very fine circuitry decreases the size of a chip. The result - the ability to process data much faster. Each chips price also drops - I guess that is if you don't have to payoff 2 billion in expenditures! Now you get the point - outsource and get faster chips, more rapid production turnaround - for less. Trust me - expect more chipmakers to be making similar calls in the future.

OH - and of course Sony did not confirm these reports-its a competitive advantage.
In April TSMC reported that they plan to start producing chips using 45-nanometer process technology in September.