Sony Group and Taiwan Semiconductor Manufacturing Co (TSMC) are in discussions to invest a combined one trillion yen (US$6.4 billion) in their planned image sensor factory in Japan, Bloomberg reported, citing 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, the person added.

TSMC and Sony Semiconductor Solutions, the Japanese company’s chip arm, are eyeing demand for artificial intelligence-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.

A virtually risk-free investment

"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 noted.

Sony has supplied premium image sensors to Apple, Huawei Technologies, and Samsung Electronics 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 Japanese company’s shares rose as much as 2.2 per cent, while TSMC’s gained 1.7 per cent on Monday. The talks were earlier reported by the Nikkei.