(Aug 10): Sony Group Corp and Taiwan Semiconductor Manufacturing Co (TSMC) are in talks to spend a combined ¥1 trillion (US$6.4 billion or RM25.8 billion) on their planned image sensor factory in Japan, according to a person familiar with the matter.

The two companies are seeking to begin production in 2029, the person said, asking not to be named because the talks are private. No time frame was given for the investment under discussion, they said. The Japanese company’s shares rose as much as 2.2%, while TSMC’s gained 1.7% on Monday.

TSMC and the Japanese company’s chip arm, Sony Semiconductor Solutions Corp, are eyeing demand for artificial intellligence (AI)-wielding robots and self-driving cars, which are expected to require more sensors to function. In May, the two partners announced preliminary talks to build new production lines and development facilities within Sony’s existing image sensor factory in southern Japan’s Kumamoto.

“This is a virtually risk-free investment for Sony and TSMC,” Toyo Research Advice Co analyst Hideki Yasuda said. The joint venture lowers Sony’s burden in an arena that requires big capital spending to stay relevant, while securing steady revenue for TSMC, he said.

Sony has supplied premium image sensors to the likes of Apple Inc, Huawei Technologies Co and Samsung Electronics Co, and seeks to expand its offerings to cars and robots. The joint venture is part of its push toward a more asset-light approach in sensors, as it focuses more of its resources on intellectual property like music distribution rights, film and video game franchises.

Sony, which is a minority shareholder in TSMC’s chip fabrication site in the region, will be the controlling shareholder of the new joint venture. Japan’s government will consider providing financial support to the venture, Trade Minister Ryosei Akazawa said.

The talks between the two chipmakers, which were reported earlier by the Nikkei, underscore confidence in the resilience of Japan’s semiconductor industry despite frequent earthquakes, floods and typhoons. A decade ago, Sony took more than three months to recover from a magnitude-7.3 earthquake in Kumamoto, but it expects to recover from last month’s quake in just a few weeks.