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Sony sees surge in chip demand pushing profit nearing 20-year record
April 28, 2017 / 6:24 AM / 8 months ago

Sony sees surge in chip demand pushing profit nearing 20-year record

TOKYO (Reuters) - Sony Corp on Friday said it expects annual profit to surge 73 percent, closing in on a two decade-old record, as its cash-cow image sensor business recovers from quake damage just as smartphone makers start loading handsets with more sensors.

Sony Corp's logo is seen on its Crystal LED Integrated Structure (CLEDIS) display at its headquarters in Tokyo, Japan, February 2, 2017. REUTERS/Kim Kyung-Hoon

Sony forecast 500 billion yen ($4.50 billion) in operating profit for the year ending March, just a few billion shy of analyst estimates compiled by Thomson Reuters.

If achieved, profit would be at its highest since peaking at 526 billion in the year through March 1998, when strong consumer electronics sales combined with the popularity of the first PlayStation games console and box-office hit “Men in Black”.

The return to golden-era profit follows a massive overhaul under Chief Executive Officer Kazuo Hirai which included exiting the laptop business and downsizing TV operations.

Image sensors have emerged as the biggest contributor to profit growth, as operations at a factory damaged by earthquakes a year ago return to normal just as smartphone makers are increasingly adopting dual-lens rear cameras in their handsets, requiring extra sensors.

“The market is growing for higher-end models with dual-lens rear cameras or with high-performance front cameras designed for self-shooting,” Chief Financial Officer Kenichiro Yoshida said at an earnings briefing. “That serves as a tailwind for us.”

Sony forecast its chip division, which includes image sensors, to return to profit this year, at 120 billion yen.

To meet increased demand, it will more than double capital expenditure on image sensors to 110 billion yen, raising production capacity by 13.6 percent by the end of March.

In the gaming business, another revenue pillar, Sony expects profit to grow 25.4 percent, spurred by software sales online.

“It has been three and a half years since the debut of the PlayStation 4,” Yoshida said. “Sales are likely to slow (by 10 percent) to 18 million units this year, but we are planning to launch major software titles. We believe the platform has entered the harvest period,” he said, referring to a console’s period of peak revenue.

Sony also said it expects its pictures segment, which is working through a turnaround plan, to return to profit after a $1 billion writedown last year.

($1 = 111.1600 yen)

Reporting by Makiko Yamazaki; Editing by Christopher Cushing

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