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Semiconductor Business Semiconductor Business PresentationPresentation

Sony CorporationSony CorporationExecutive Deputy PresidentExecutive Deputy PresidentCorporate Executive OfficerCorporate Executive Officer

President of the Semiconductor President of the Semiconductor Business GroupBusiness Group　　

Yutaka NakagawaYutaka Nakagawa

Feb. 21Feb. 21stst, 2008 , 2008 （（Thu.Thu.））

Sony Semiconductor Business Group OrganizationSony Semiconductor Business Group Organization

Semiconductor Semiconductor Business GroupBusiness Group

Image Sensor Business DivisionImage Sensor Business Division

Micro Device Business Division Micro Device Business Division

LSI Business DivisionLSI Business Division

Laser Business DivisionLaser Business Division

Sony Semiconductor Kyushu Corp. Sony Semiconductor Kyushu Corp.

Sony Shiroishi Semiconductor Inc.Sony Shiroishi Semiconductor Inc.

Design Platform DivisionDesign Platform Division

Semiconductor Technology Semiconductor Technology Development DivisionDevelopment Division

Research & Development DivisionResearch & Development Division

Semiconductor Sales DivisionSemiconductor Sales Division

Planning & Control DivisionPlanning & Control Division

Quality Assurance DivisionQuality Assurance Division

Sony LSI Design Inc.Sony LSI Design Inc.

DP T.SaitoDP T. SuzukiDP M. Tsuruta

President Y. Nakagawa

Senior General Manager Senior General Manager T. OgasawaraT. Ogasawara

Senior General Manager Senior General Manager Y.OsaY.Osa

Senior General Manager Senior General Manager T. SaitoT. Saito

Senior General Manager Senior General Manager Y. UedaY. Ueda

Senior General Manager Senior General Manager S.HashimotoS.Hashimoto

Senior General Manager Senior General Manager M. M. TsurutaTsuruta

Senior General Manager Senior General Manager T.KusudaT.Kusuda

Senior General Manager Senior General Manager S. IwaseS. Iwase

Senior General Manager Senior General Manager Y. OkamotoY. Okamoto

Senior General Manager Senior General Manager N. N. ShirotaShirota

President　S.Tanemo

President　 Ｎ. Ｓｈｉｒｏｔａ

President　H.Sudou

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Semiconductor Business Presentation

AgendaAgenda

1.　FY2007 Review　ⅰ）Initiatives

　　・Asset Light　　・Selection & Focus

　ⅱ）Key Performance Indicators

2.　For FY2008

Semiconductor Business Presentation

AgendaAgenda

1.　FY2007 Review　ⅰ）Initiatives

　　・Asset Light　　・Selection & Focus

　ⅱ）Key Performance Indicators

2.　For FY2008

3

Semiconductor Business Presentation

■ Background of Asset Light

Lack of applications （technology drivers）for cutting-edge line　　 　→ Failure of “Water Fall Strategy”

■ Purpose of Asset LightDevelop 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 LightAsset Light

NagasakiNagasakiOTSSOTSS

FishkillFishkill

Increase chip outputIncrease chip outputwith shift to next with shift to next generation process generation process

（Assuming constant monthly wafer unit production）

Image of possible “PS3” Core LSIunit production

90nm 65nm 45nm

Semiconductor Business Presentation

Asset LightAsset 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 TSSemiconductor Corp. (OTSS)

Change from inChange 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

45nm45nm““Cell/B.E.Cell/B.E.””

Cutting-edge process development

(IBM, Sony, Toshiba)

Early withdrawal from joint development agreement for cuttingEarly 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)※

※

※

“Cell Broadband Engine™”=“Cell/B.E.”

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Semiconductor Business Presentation

Asset LightAsset Light■ Sale of Nagasaki Fab2 1st Floor 300mm Wafer Line Facilities

・Finalize agreement to transfer assets to Toshiba (Feb 19th,2008)・Amount of sale ：approximately 90 billion yen

■ Establishment of new JV company・Finalize JV contract with Toshiba (Feb 19th, 2008)・Start of Operation ：Apr. 1st, 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 Fab2-1st 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

Semiconductor Business Presentation

CuttingCutting--edge MOS Logic LSI Initiativeedge MOS Logic LSI Initiative

Continue cuttingContinue cutting--edge MOS Logic LSI product edge MOS Logic LSI product development after 32nm and beyonddevelopment after 32nm and beyond

LSI DesignLSI Design 　　 　→　→ InIn--house developmenthouse development

ProductionProduction 　　 　→　→ Outsource to other manufacturersOutsource to other manufacturers　　　　　　　　（（Wafer manufacturing processWafer manufacturing process））　　　　※　　　　※Considering whether to manufacture Considering whether to manufacture 　　　　　　　　　　　　semiconductor packaging insemiconductor packaging in--househouse

Process DevelopmentProcess Development　→　→ TerminatedTerminated　　　　※　　　　※Shift development personnel to other areasShift 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,,　　　　　　　　　　OLED etc.OLED etc.））

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Semiconductor Business Presentation

FY05 FY06 FY07

CuttingCutting--edge Image Sensor Developmentedge Image Sensor Development

1.41.4um CMOS Image Sensorum CMOS Image Sensor/image sensing for cellular/image sensing for cellular

System on Chip DevelopmentSystem on Chip Development

Lead industry for product Lead industry for product shipment timeshipment time

Realize high image quality Realize high image quality

3535mm fullmm full--sizesizeCMOS Image Sensor CMOS Image Sensor

development for Ddevelopment for D--SLRSLR

Realize high yield Realize high yield and high image qualityand high image quality

Technology fostered with leading Technology fostered with leading process development and productionprocess development and production

Technology for: Technology for: Microfabrication/3D simulation/Microfabrication/3D simulation/

Yield improvement/NoiseYield improvement/Noise--reductionreduction　　etc.etc.

Image of the trend of Image of the trend of Sony semiconductor R&D Sony semiconductor R&D

expensesexpenses(R&D, D&D)(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

ImageImageSensorSensor

Semiconductor Business Presentation

AgendaAgenda

1.　FY2007 Review　ⅰ）Initiatives

　　・Asset Light　　・Selection & Focus

　ⅱ）Key Performance Indicators

2.　For FY2008

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Semiconductor Business Presentation

Selection and Focus: Selection and Focus: Initiatives in Business Focus AreasInitiatives in Business Focus Areas

TV/Video

・・Full entryFull entry into LCD Source Drivers LCD Source Drivers （（10bit/8bit10bit/8bit））・・Silicon Tuner Chip set commercializationSilicon Tuner Chip set commercialization・・Commence 2nd Generation Commence 2nd Generation BluBlu--rayray Chip set mass Chip set mass 　　production shipmentsproduction shipments

Game

・・Commence 65nm Commence 65nm ““Cell/B.E.Cell/B.E.”” mass production shipmentsmass production shipments（（11stst Half of FY07Half of FY07））

・・Commence 65nm Commence 65nm ““RSXRSX”” mass production shipmentsmass production shipments（（22ndnd Half of FY07Half of FY07））

・・Commence LSI mass production shipments for the newCommence LSI mass production shipments for the newmodel model ““PSPPSP”” (Release Date Sep. 2007)(Release Date Sep. 2007)

ImageSensor

・・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””

““CyberCyber--shotshotCell phoneCell phone”” ““HDRHDR--SR11/12SR11/12””

Semiconductor Business Presentation

Selection and FocusSelection and Focus

Power ShiftPower Shift

GameGame

TV/VideoTV/Video

Digital ImagingDigital Imaging

Analog ICAnalog IC

etc.etc.

CCDCCD

CMOSCMOSImage SensorImage Sensor

Image sensingImage sensingSystem on ChipSystem on Chip

etc.etc.

Power ShiftPower Shift

System LSISystem LSI Image SensorImage Sensor

Focus Categories

Focus Focus CategoriesCategories

Sele

ctio

n C

ateg

orie

sSe

lect

ion

Cat

egor

ies

Sele

ctio

n C

ateg

orie

s

Focus Categories

Focus Focus CategoriesCategories

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Semiconductor Business Presentation

AgendaAgenda

1.　FY2007 Review　ⅰ）Initiatives

　　・Asset Light　　・Selection & Focus

　ⅱ）Key Performance Indicators

2.　For FY2008

Semiconductor Business Presentation

-2,000

0

2,000

4,000

6,000

8,000

10,000

Sales/Operating Profit (Loss) Trend Sales/Operating Profit (Loss) Trend ((FY0FY055～～FY0FY07)7)

4,960

7,8008,600

（’000 mln yen）

（Forecast）

+59%

+10%

ImageImageSensorSensor

GameGame

System LSI, otherSystem LSI, other

FY05 FY06 FY07

Sales↓

OP↓

SalesSales OP (Loss)OP (Loss)

※Excludes Laser, includes high-temp. LCD

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Semiconductor Business Presentation

0

400

800

1,200

1,600

FY04 FY05 FY06 FY07

Capital Expenditure Trend Capital Expenditure Trend （（FY04FY04～～FY07FY07））

（’000 mln yen）

（Forecast）

1,5001,400

1,500

1,100

ImageImageSensorSensor

GameGame

System LSI, OtherSystem LSI, Other

＜Direction＞Reduce investment in MOS,active investment in ImageSensor

＜Direction＞Reduce investment in MOS,active investment in ImageSensor

Semiconductor Business Presentation

AgendaAgenda

1.　FY2007 Review　ⅰ）Initiatives

　　・Asset Light　　・Selection & Focus

　ⅱ）Key Performance Indicators

2.　For FY2008

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Semiconductor Business Presentation

Business PoliciesBusiness Policies

■■ Continuation/Strengthening of Continuation/Strengthening of 　　　　Selection and FocusSelection and Focus

■■ Continued profit generation structureContinued profit generation structure

Semiconductor Business Presentation

Image SensorImage Sensor BusinessBusiness

■ 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-sizeCMOS image sensors

　　　（Jan. 30th, 2008 announcement）

Maintain share, expand market in Maintain share, expand market in ““LargeLarge--sizesize”” ““High image quality High image quality /High resolution/High resolution”” Areas Areas

Share expansion in the Volume Zone for CellularShare 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～

αflagship model

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Semiconductor Business Presentation

Key Factors for Cellular BusinessKey Factors for Cellular Business

1.41.4um CMOS Image Sensorum CMOS Image SensorLead industry for mass productionLead industry for mass production

1.4um1.4um image sensingimage sensingSystem on ChipSystem on Chip mass mass

production commencedproduction commenced

1.4um/8 mega pixels　Imageby 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 volumeexceeds 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%Share Target FY2009 12%

HighHigh--end (5 mega pixels and overend (5 mega pixels and over）） Affordable Range (3 mega pixel rangeAffordable Range (3 mega pixel range））

Semiconductor Business Presentation

Contribute to SonyContribute to Sony’’s Game business with active s Game business with active cost reduction of the cost reduction of the ““PS3PS3”” Core LSICore LSI

GameGame--related Businessrelated 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

90nm 65nm 45nm

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Semiconductor Business Presentation

System LSI Business System LSI Business （（TV, Video, Digital ImagingTV, Video, Digital Imaging））

Silicon Tuner Chip setSilicon Tuner Chip setFront End LSIFront End LSIBack End LSI etc.Back End LSI etc.

BluBlu--ray Chip Setray Chip Setetc.etc.

AV CodecAV CodecIImage processing enginemage processing engineetc.etc.

Strengthen cooperation with Sony inStrengthen cooperation with Sony in--house set business unitshouse set business units

Take advantage of Take advantage of semiconductor ksemiconductor knownow--hhowow,,From a From a ““vertical integration structurevertical integration structure””

to an to an ““technology solution service structuretechnology solution service structure”” businessbusiness

Architecture/Algorithm design

RTL design

Layout/Mask design

Wafer production

Test (PC)

Assembly/PackagingTest (FC)

Architecture/Algorithm design

RTL design

Layout/Mask design

Wafer production

Test (PC)

Assembly/Packaging

Test (FC)

Design for TestabilityDesign for Testability

Design for ManufacturingDesign for Manufacturing

Semi Packaging Tech Semi Packaging Tech （（SiPSiP etcetc））

CodesignCodesign/Verification/Verification

BuiltBuilt--in Selfin Self--TestingTesting

BuiltBuilt--on Selfon Self--TestingTesting

Semiconductor Business Presentation

Technology Solution Service Technology Solution Service （（Semiconductor PackagingSemiconductor Packaging））

Offer a total solution with SonyOffer a total solution with Sony’’s cuttings cutting--edge edge SiPSiP technologytechnology

ProductProduct　　 Package structurePackage structure　　

MobileMobile

DSC/DVCDSC/DVC

Mobile PhoneMobile Phone

GameGame 　　

“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”

“PSP”

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Semiconductor Business Presentation

Analog BusinessAnalog BusinessBusiness development focused on categoriesBusiness development focused on categories

where Sony has competitive strengthwhere Sony has competitive strength（（LCD LCD Source DriverSource Driver, , PDICPDIC, , I/F ICI/F IC, Power , Power ICIC, , MMICMMIC））

LCD TVs are equipped withan 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 DriversSony 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 SourceDriver Biz.

Image of Sony LCD TV unit shipment trend

＜ LCD Source Driver ＞

Semiconductor Business Presentation

Semiconductor Laser BusinessSemiconductor Laser Business

■ Maintain No.1 share of blue-violet laser market for playback and recordingFY2007 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 blueActive development of the blue--violet laser violet laser for for BluBlu--rayray

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)

　Joint development with Nichia Corp.

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Semiconductor Business Presentation

Production SitesProduction Sites

Nagasaki TECNagasaki TEC（（MOS production siteMOS production site））

Kagoshima TECKagoshima TEC（（MultiMulti--category production sitecategory production site））

Oita TECOita TEC（（CuttingCutting--edge packagingedge packaging　　

development /production sitedevelopment /production site））

Kumamoto TECKumamoto TEC（（Imaging device production siteImaging device production site））

Sony Device TechnologySony Device Technology(Thailand) Co., Ltd.(Thailand) Co., Ltd.

（（Assembly siteAssembly site））

Sony Shiroishi Semiconductor Inc.Sony Shiroishi Semiconductor Inc.（（Semiconductor laser production siteSemiconductor laser production site））

Sony Semiconductor Kyushu Corp.Sony Semiconductor Kyushu Corp.

Semiconductor Business Presentation

Sony Semiconductor BusinessSony 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.)

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Semiconductor Business Presentation