Sony Group Corp. is considering building a new plant in southwestern Japan to produce semiconductors used in smartphones, with an investment of several hundred billion yen, according to a source familiar with the matter.

Sony, a major global producer of image sensors, expects the new factory in Kumamoto Prefecture to start operations in fiscal 2025 or later, and could begin construction as early as 2024, the source said.

The move is seen as aimed at enhancing domestic production of semiconductors amid growing demand worldwide in line with the progress of digitalization. Japan also sees the devices as closely linked to its economic security.

The Japanese electronics and entertainment conglomerate already manufactures cutting-edge image sensors in Kumamoto. It is also constructing a foundry in the prefecture with Taiwan Semiconductor Manufacturing Co., the world's largest contract chipmaker.

File photo shows Sony Group Corp.'s semiconductor manufacturing plant in Kumamoto Prefecture. (Photo courtesy of Sony Group Corp.)(Kyodo)

The Japanese government will provide up to 476 billion yen ($3.5 billion) in subsidies to TSMC's joint-venture chip plant with Sony and Denso Corp., which aims to start production by the end of 2024.

Sony and seven other major Japanese firms including Toyota Motor Corp. have also set up a firm called Rapidus Corp. to manufacture next-generation 2-nanometer chips in Japan possibly from 2027.

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