SONY Corp will invest US$1.2 billion in the next financial year to double its output of image sensors, taking advantage of brisk demand for digital cameras and smartphones.

The sum includes a deal announced last week to buy back a semiconductor production line from Toshiba Corp, which has been estimated by an industry source at 50 billion yen (US$600 million).

Sony will take advantage of a Japanese government subsidy for environmentally friendly businesses to help with the investment, it said in a statement but declined to say how much that would be.

It will convert part of the plant in Nagasaki, southern Japan, for the production of CMOS (complementary metal-oxide semiconductor) sensors and invest in wafer processing equipment for CMOS image sensors.

Sony is the world's second largest digital camera maker behind Canon Inc and operates a mobile phone joint venture with Sweden's Ericsson.