Sony Corp., Sony Computer Entertainment Inc. (SCEI) and Toshiba Corp. on Wednesday officially agreed to form semiconductor manufacturing joint-venture that will be controlled by Toshiba and will manufacture various chips for the companies. To take control over the new joint-venture company, Toshiba will acquire equipment worth $832 million from Sony.

Under the terms of the definitive agreement, the joint-venture will start operation from April 1, 2008 in Nagasaki Technology Center of Sony Semiconductor Kyushu Corp. (SCK). It will be 60% owned by Toshiba, and Sony and SCEI will each take a 20% stake. Toshiba will appoint chairman and chief executive officer of the newly formed company, whereas president and chief operating officer will be appointed by Sony. The name of the joint-venture is not yet known and the companies promised to determine it at a later date.

Within the fiscal year ending March 31, 2008, Toshiba will acquire from Sony and SCK the 300mm wafer line installed in SCK’s Nagasaki Technology Center Fab 2, with the exception of some equipment, for approximately ¥90 billion (about $832.63 million). The production line will continue to operate under the new joint-venture.

Sony has been planning to exit development and manufacturing of semiconductors for a long time due to constantly increasing development costs amid low profitability and high risks. At the same time, the large Japanese electronics group needed to ensure stable supplies of Cell microprocessor, RSX graphics processors, other advanced chips that Sony uses inside its consumer electronics (CE) products as well as constant shrinking of fabrication technologies to lower production costs. All of the goals are achieved through the joint-venture with Toshiba and various agreements with Toshiba and IBM: Sony no longer has chip development, chip redesign and chip manufacturing in-house.

The joint-venture with Toshiba will produce Cell and RSX semiconductors used inside Sony PlayStation 3 game console as well as CE-oriented processors from Sony and Toshiba.

Manufacturing will start with 65nm process, and the joint-venture will promote migration to 45nm process mass production, in cooperation with Toshiba’s system LSI manufacturing operation in Oita, while also working to achieve advances in manufacturing technologies and efficiencies.