Semiconductor Business Presentation

(1)

Semiconductor Business

Presentation

Sony Corporation

Executive Deputy President

Corporate Executive Officer

President of the Semiconductor

Business Group

Yutaka Nakagawa

Feb. 21

st

, 2008

（

Thu.

）

Sony Semiconductor Business Group Organization

Semiconductor

Business Group

Image Sensor Business Division Image Sensor Business Division Micro Device Business Division Micro Device Business Division

LSI Business Division LSI Business Division Laser Business Division

Laser Business Division

Sony Semiconductor Kyushu Corp.

Sony Shiroishi Semiconductor Inc.

Design Platform Division

Semiconductor Technology

Semiconductor Technology

Development Division

Research & Development Division

Semiconductor Sales Division

Planning & Control Division Planning & Control Division Quality Assurance Division Quality Assurance Division

Sony LSI Design Inc. Sony LSI Design Inc.

DP T.Saito DP T. Suzuki

DP M. Tsuruta

President Y. Nakagawa

Senior General Manager

Senior General Manager T. OgasawaraT. Ogasawara

Senior General Manager Y.OsaY.Osa

Senior General Manager T. SaitoT. Saito

Senior General Manager Y. UedaY. Ueda

Senior General Manager

Senior General Manager S.HashimotoS.Hashimoto

Senior General Manager M. M. TsurutaTsuruta

Senior General Manager T.KusudaT.Kusuda

Senior General Manager S. IwaseS. Iwase

Senior General Manager Y. OkamotoY. Okamoto

Senior General Manager N. N. ShirotaShirota

President　S.Tanemo

President　Ｎ. Ｓｈｉｒｏｔａ

(2)

Semiconductor Business Presentation

Agenda

1.

FY2007 Review

　ⅰ）

Initiatives

　　・

Asset Light

　　・

Selection & Focus

　ⅱ）

Key Performance Indicators

2.

For FY2008

Agenda

1.

FY2007 Review

　ⅰ）

Initiatives

　　・

Asset Light

　　・

Selection & Focus

　ⅱ）

(3)

■

Background of Asset Light

Lack of applications （technology drivers）for cutting-edge line

　　　→Failure of “Water Fall Strategy”

■

Purpose of Asset Light

Develop flexible cutting-edge MOS Logic production depending on volume due to the effective utilization of alliances/foundries with other companies

（Bear all fixed costs →bear variable costs）

　　 ※In-house production of image sensors, etc. for high value-added process development　

/manufacturing technology

Asset Light

Nagasaki NagasakiOTSS OTSS Fishkill Fishkill

Increase chip output

Increase chip output

with shift to next

generation process

（Assuming constant monthly wafer unit production）

Image of possible “PS3” Core LSI unit production

90nm 65nm 45nm

Asset Light

Sony Nagasaki Fab2

Change from inChange from in--house production to foundry procurementhouse production to foundry procurement

　・

　・Sale of FacilitiesSale of Facilities

　・

　・Establishment of a new JV companyEstablishment of a new JV company

Oita TS

Semiconductor

Corp. (OTSS)

Change from in

Change from in--house production to foundry procurementhouse production to foundry procurement

　・

　・Termination of JV contractTermination of JV contract

　・

　・Sale of FacilitiesSale of Facilities

IBM East Fishkill

Factory

Change from inChange from in--house production to foundry procurement ofhouse production to foundry procurement of

45nm

45nm““Cell/B.E.Cell/B.E.””

Cutting-edge process development (IBM, Sony, Toshiba)

Early withdrawal from joint development agreement for cutting

Early withdrawal from joint development agreement for cutting-

-edge process technologies at 32nm and beyond

edge process technologies at 32nm and beyond

（

（Ended Dec. 21, 2007Ended Dec. 21, 2007））

(“Cell/B.E.” “RSX” Production)

(“RSX” Production)

(“Cell/B.E.”　　※Production)

※ ※

(4)

Asset Light

■

Sale of Nagasaki Fab2 1

st

Floor 300mm Wafer Line Facilities

・

Finalize agreement to transfer assets to Toshiba (Feb 19

th

,2008)

・

Amount of sale

：

approximately 90 billion yen

■

Establishment of new JV company

・

Finalize JV contract with Toshiba (Feb 19

th

, 2008)

・

Start of Operation

：

Apr. 1

st

, 2008(scheduled)

　　　　　　・

Chairman and CEO

：

To be determined

（

appointed by Toshiba

）

・

President and COO

：

To be determined

（

appointed by Sony

）

・

Ownership

：

Toshiba 60%, Sony 20%,

Sony Computer Entertainment 20%

Fab2-2nd_Floor_：_{90nm/200mm Wafer Line} 　

NP：350nm～/200mm Wafer Line Fab2-1

st_Floor_：_{65,90nm/300mm Wafer Line}

※Transfer manufacturing facilities of the line to Toshiba

　→Ｍake it available to JV company from Toshiba Fab1-2nd_Floor_：_{180nm/200mm Wafer Line}

Nagasaki Technology Center

Cutting

-

edge MOS Logic LSI Initiative

Continue cutting

-

edge MOS Logic LSI product

development after 32nm and beyond

LSI Design

　→

In

-

house development

Production

　→

Outsource to other manufacturers

（

Wafer manufacturing process

）

　　　　※

Considering whether to manufacture

semiconductor packaging in

-

house

Process Development

　→

Terminated

　　　　※

Shift development personnel to other areas

　　　　（（Next Generation CMOS Image Sensor/CCD,Next Generation CMOS Image Sensor/CCD,

　　　　　Semiconductor laser, LowSemiconductor laser, Low--temperature temperature polysiliconpolysilicon,,

(5)

FY05 FY06 FY07

Cutting

-

edge Image Sensor Development

1.4

1.4um CMOS Image Sensorum CMOS Image Sensor

/image sensing for cellular

System on Chip Development

Lead industry for product

shipment time

Realize high image quality

35

35mm fullmm full--sizesize

CMOS Image Sensor

development for D

development for D--SLRSLR

Realize high yield

and high image quality

and high image quality Technology fostered with leading Technology fostered with leading process development and production process development and production

Technology for:

Technology for:

Microfabrication/3D simulation/

Yield improvement/Noise

Yield improvement/Noise--reductionreduction　　etc.etc.

Image of the trend of

Sony semiconductor R&D

expenses

(R&D, D&D)

Without increasing total R&D expenses, strengthen and shift power to image sensor

Without increasing total R&D expenses, strengthen and shift power to image sensor

Image

Sensor

Agenda

1.

FY2007 Review

　ⅰ）

Initiatives

　　・

Asset Light

・

Selection & Focus

　ⅱ）

(6)

Selection and Focus:

Initiatives in Business Focus Areas

TV/

Video

・

・Full entryFull entry intoLCD Source Drivers LCD Source Drivers （（10bit/8bit10bit/8bit））

・

・Silicon Tuner Chip set commercializationSilicon Tuner Chip set commercialization

・

・Commence 2nd Generation Commence 2nd Generation BluBlu--rayrayChip set mass Chip set mass 　　

production shipments

production shipments

Game

・

・Commence 65nm Commence 65nm ““Cell/B.E.Cell/B.E.””mass production shipmentsmass production shipments

（

（11stst_{Half of FY07}_{Half of FY07}_）_）

・

・Commence 65nm Commence 65nm ““RSXRSX””mass production shipmentsmass production shipments

（

（22ndnd_{Half of FY07}_{Half of FY07}_）_）

・

・Commence LSI mass production shipments for the newCommence LSI mass production shipments for the new

model

model ““PSPPSP””(Release Date Sep. 2007)(Release Date Sep. 2007)

Image

Sensor

・

・High S/N highHigh S/N high--speed A/Dspeed A/D--equipped CMOS Image Sensor equipped CMOS Image Sensor

Expansion of

Expansion of ““ExmorExmor””

　　　APSAPS--C size C size 112 mega pixels for D2 mega pixels for D--SLRSLR

　　　1.75um 1/3.2 type 5 mega pixels for cellular1.75um 1/3.2 type 5 mega pixels for cellular

　　　1.77um 1/3.1 type 5 mega pixels for camcorders etc 1.77um 1/3.1 type 5 mega pixels for camcorders etc

・

・Image Sensor cumulative shipments: Image Sensor cumulative shipments:

Achieved

Achieved 8800 million units 00 million units （（as of Dec. 2007as of Dec. 2007））

・

・5 mega pixels and over5 mega pixels and over--equipped sensor share for cellular:equipped sensor share for cellular:

　Attained about 75% share Attained about 75% share （（Sony estimateSony estimate））

“

“αα770000”” ““_{Cell phone}_{Cell phone}CyberCyber--shotshot”_”““HDRHDR--SR11/12SR11/12””

Selection and Focus

Power Shift Power Shift

Game

TV/Video

Digital Imaging

Analog IC

etc.

CCD

CMOS

Image Sensor

Image sensing

System on Chip

etc.

Power Shift Power Shift

System LSI

Image Sensor

Focus

Categories

Focus

Categories

Selection Cat

egories

Selection Cat

egories

Selection Cat

egories

Focus

Categories

Focus

Categories

(7)

Agenda

1.

FY2007 Review

　ⅰ）

Initiatives

　　・

Asset Light

　　・

Selection & Focus

ⅱ）

2.

For FY2008

Semiconductor Business Presentation -2,000 0 2,000 4,000 6,000 8,000 10,000

Sales/Operating Profit (Loss) Trend

(

FY0

5

～

FY0

7)

4,960

7,800

8,600

（’000 mln yen）（Forecast） +59% +10% Image Image Sensor Sensor Game Game

System LSI, other

System LSI, other

FY05

FY06

FY07

Sales

↓

OP

↓

Sales

OP (Loss)

(8)

0

400

800

1,200

1,600

FY04

FY05

FY06

FY07

Capital Expenditure Trend

（

FY04

～

FY07

）

（’000 mln yen）（Forecast）

1,500

1,400

1,500

1,100

Image Image Sensor Sensor Game Game

System LSI, Other

System LSI, Other

＜Direction＞

Reduce investment in MOS, active investment in Image Sensor

＜Direction＞

Reduce investment in MOS, active investment in Image Sensor

Agenda

1.

FY2007 Review

　ⅰ）

Initiatives

　　・

Asset Light

　　・

Selection & Focus

　ⅱ）

(9)

Business Policies

■

Continuation/Strengthening of

Selection and Focus

■

Continued profit generation structure

Image Sensor

Business

■Strengthen production capacity （June 6th_{, 2007 announcement}_） Increase floor space of clean room in Building No.2 ,

Kumamoto Tech by 5,000㎡

Expand production facilities

■Take advantage of Sony’s technological edge, maintain CCD business

■Expand D-SLR business due to mass production of 35mm full-size

CMOS image sensors

　　　（Jan. 30th_{, 2008 announcement}_）

Maintain share, expand market in

“

Large

-

size

”

“

High image quality

/High resolution

”

Areas

Share expansion in the Volume Zone for Cellular

・35mm full-size 24.81 effective mega pixels

・High S/N・high speed imaging

　　～All-pixel scan mode　6.3 frames/s～

(10)

Key Factors for Cellular Business

1.4

1.4um CMOS Image Sensorum CMOS Image Sensor Lead industry for mass production

Lead industry for mass production 1.4um1.4umSystem on ChipSystem on Chipimage sensingimage sensingmass mass

production commenced

1.4um/8 mega pixels　Image by Prototype CMOS

1.4um Pixel Low Noise Process Compact & High Performance ISP

Column ADC for High Speed & Low Noise

Compact Size　&

Best Picture Quality

0 20 69 40 60 80 2007 2008 Mpcs 21

16

Sony volume exceeds 300% compared to the prior year

50

Volume of Sensors for cell phones equipped with CMOS exceeding 5 mega pixels

(about 72%)

(about 75%)

(Sony Share)

※Imaging Signal Processor

※

～Survey by Sony～

Mkt. Sony

Share Target FY2009 12%

High

-

end (5 mega pixels and over

）

Affordable Range (3 mega pixel rangeAffordable Range (3 mega pixel range））

Contribute to Sony

’

s Game business with active

cost reduction of the

“

PS3

”

Core LSI

Game

-

related Business

■Flexible production by using the new JV company, Toshiba, IBM, and other foundries

■Continuous improvement of quality and yield of the “PS3” Core LSI 65nm generation　

■Initiatives to develop the next generation shrink versions　　　

　－Full launch of the development and design of the 45nm “PS3” Core LSI　　　

　－Continuous improvement and development of LSI for “PSP”

Image of the cost trend for the “PS3” Core LSI

(11)

System LSI Business

（

TV, Video, Digital Imaging

）

Silicon Tuner Chip set

Silicon Tuner Chip set

Front End LSI

Back End LSI etc.

Blu

Blu--ray Chip Setray Chip Set

etc.

etc. AV Codec

AV Codec

I

Image processing enginemage processing engine etc.

etc.

Strengthen cooperation with Sony in

-

house set business units

Take advantage of

Take advantage of semiconductor k

semiconductor k

now

-

h

ow

,

From a

From a “

“

vertical integration structure

”

to an

to an “

“

technology solution service structure

”

business

Architecture/Algorithm design RTL design Layout/Mask design Wafer production Test (PC) Assembly/Packaging Test (FC) Architecture/Algorithm design RTL design Layout/Mask design Wafer production Test (PC) Assembly/Packaging Test (FC)

Design for Testability Design for Testability

Design for Manufacturing Design for Manufacturing

Semi Packaging Tech Semi Packaging Tech （（SiPSiPetcetc））

Codesign

Codesign/Verification/Verification

Built

Built--in Selfin Self--TestingTesting

Built

Built--on Selfon Self--TestingTesting

Technology Solution Service

（

Semiconductor Packaging

）

Offer a total solution with Sony

’

s cutting

-

edge

SiP

technology

Product

Package structure

Mobile

DSC/DVC

Mobile Phone

Game

“PS3”

PoP

(Package on Package)

PiP

(Package in Package)

MCP

(Multi Chip Package)

FC-BGA

(Flip Chip BGA)

FC-BGA

(Flip Chip BGA)

PBGA

(Plastic BGA)

“PS2”

(12)

Analog Business

Business development focused on categories

where Sony has competitive strength

（

LCD

Source Driver

,

PDIC

,

I/F IC

, Power

IC

,

MMIC

）

LCD TVs are equipped with an average of about 10 LCD source drivers

■

■Take advantage of SonyTake advantage of Sony’’s technological edge in 10bit/Multis technological edge in 10bit/Multi--ChannelChannel、、　

　Improve the ratio of inImprove the ratio of in--house large screen LCD TVs equipped withhouse large screen LCD TVs equipped with Sony LCD Source Drivers

Sony LCD Source Drivers

■

■Expand external salesExpand external sales

6.3

10.0

（Forecast）

Start shipping Full entry Business Expansion

FY06

FY07

FY08

～

（mln units）

LCD Source

Driver Biz.

Image of Sony LCD TV unit shipment trend

＜

LCD Source Driver

＞

Semiconductor Laser Business

■Maintain No.1 share of blue-violet laser market for playback and recording FY2007 blue-violet laser market share 74%　（Sony estimate） ■Mass production of blue-violet optical-integrated device by year-end

（Jan. 30, 2008 announcement）

■Cumulative unit shipments of semiconductor laser diodes:

Achieved 2.25 billion units （At the end of Jan. 2008）

Active development of the blue

-

violet laser

for

Blu

-

ray

Blue-violet semiconductor laser for Blu-ray

　H/H Drives　5.6mmφpackage

　Slim Drives　3.8mmφpackage

Optical-integrated device for Blu-ray

　Basic prototype (14mm X 7.4mm X 3mm)

(13)

Production Sites

Nagasaki TEC Nagasaki TEC （

（MOS production siteMOS production site））

Kagoshima TEC

Kagoshima TEC

（

（MultiMulti--category production sitecategory production site））

Oita TEC

（

（CuttingCutting--edge packagingedge packaging　　

development /production site development /production site））

Kumamoto TEC

（

（Imaging device production siteImaging device production site））

Sony Device Technology

(Thailand) Co., Ltd.

（

（Assembly siteAssembly site））

Sony Shiroishi Semiconductor Inc.

（

（Semiconductor laser production siteSemiconductor laser production site））

Sony Semiconductor Kyushu Corp.

Sony Semiconductor Business

Advantage of having a significant in-house set business

(TV, Video, Digital Imaging, Game, etc.)

Technological strength of Sony Semiconductor

(Image Sensor, LSI for Game, etc.)

(14)

Semiconductor Business Presentation