By Reiji Murai and Sophie Knight
TOKYO (Reuters) - Sony Corp may buy a Japanese factory from chipmaker Renesas Electronics Corp to boost production of its imaging sensors as demand rises from smartphone makers, sources told Reuters on Wednesday.
Negotiations are ongoing and no agreement has been reached, the sources said. Both companies declined to comment on the matter.
Imaging sensors have been a rare success for Sony, which has come to dominate the CMOS sector, claiming a third of the market in 2012 according to research firm Techno Systems Research. Sony's CEO, Kazuo Hirai, has identified the sensors as one of the pillars of his company's revival.
The global CMOS sensor market is forecast to grow 60 percent over the next five years to 2017 to $12.28 billion, according to Techno Systems Research, as demand for smartphones continues to expand, particularly in China.
Sony says it is hoping to find new customers for its CMOS sensors, which are also used in Apple Inc's iPhone and Samsung Electronics' Galaxy smartphones.
However, an analyst questioned whether Sony needs to increase capacity of the sensors as demand outside the smartphone segment wanes.
"If demand for CMOS sensors going into digital cameras is declining, as seen in the 2Q results, then you have ready capacity. Without more details about the price tag, it's difficult to determine who benefits from this deal," said Atul Goyal, equity analyst at Jefferies in Singapore.
Sony invested 220 billion yen ($2.15 billion) in CMOS production in the three years to September, lifting capacity by 140 percent. It said it hopes to extend capacity by a further 20 percent in the next few years, with the bulk of this business year's 60 billion yen budget for investment in semiconductors going into CMOS.
One source close to the company say that it could choose to spend that on increasing capacity at its existing plants in Nagasaki and Kumamoto, instead of buying Renesas's factory in Tsuruoka in northern Japan.
($1 = 102.4450 Japanese yen)
(Additional reporting by Maki Shiraki; Editing by Matt Driskill)