Sony assumes that the sensor business will only recover from Huawei’s...

In August, the US imposed sanctions prohibiting Huawei from sourcing chips made by foreign manufacturers using US technology such as Sony.

Due to these effects, CFO Hiroki Totoki assumes that the sensor business will only fully recover in the financial year to March 2023.

“We assume it will be a long time before other customers follow the trend towards higher-functionality and larger chip-sized smartphone cameras led by the Chinese customer. We therefore expect a significant recovery in profitability, which will be supported by these high values. “Additional products for the fiscal year ending March 31, 2023,” said Totoki during the earnings presentation.

Despite the impact on Sony’s sensor business, the company has raised its annual earnings outlook as it expects the gaming business to grow after the launch of the PlayStation 5 (PS5) next month. The revised outlook increases Sony’s expected operating income from ¥ 620 billion to ¥ 700 billion.

Sony expects to sell more than 7.6 million units of its PS5 console by March, Totoki said.

“For sales of the PS5 this fiscal year, we aim to exceed the 7.6 million units sold in the fiscal year the PS4 was launched, which achieved significant market share and was a great success,” said the CFO.

Together with the increased forecast, Sony also expects an annual profit of 300 billion yen compared to the previously estimated 240 billion yen.

The optimistic full year earnings outlook is based on a strong performance in the first half of fiscal year 20. Sony posted sales of 4.98 trillion yen, up 23% year over year despite the impact of the coronavirus pandemic.

In terms of half-year operating income, Sony had sales of nearly 546 billion yen versus 510 billion yen.

Income before tax reached ¥ 619.5 billion, an increase of 25% over the previous year, and net income attributable to Sony shareholders doubled to ¥ 693 billion.

The increase in sales was largely due to Sony’s gaming business, which has been performing well year-round so far. For the first half of the year, Sony’s operating income rose to 229 billion yen from 139 billion yen last year. Gaming sales also rose to 1.11 trillion yen, up 22% year over year due to increases in gaming software sales as well as PlayStation Plus sales.

Half-year sales of Sony’s electronics products and solutions business were ¥ 836.5 billion, down 14.5% year-over-year, although demand for televisions increased 2.3 year-over-year in the second quarter % rose to ¥ 505 billion. The segment’s operating income was 45 billion yen compared to 66.5 billion yen a year earlier.

Sony’s imaging and sensor solutions business posted a 5.2% year-over-year revenue decline for the half year as image sensor revenue fell to ¥ 513 billion. The segment’s operating income also declined, increasing from ¥ 126 billion to ¥ 75.3 billion due to inventory impairments and increased R&D expenses.

Sales also fell in Sony’s picture business. Sales fell year-on-year by 18% to ¥ 367 billion. The company attributed the decline to theater closings due to the COVID-19 pandemic, lower ad revenue for media networks, and declines in revenue due to lower TV show deliveries. However, operating income rose from ¥ 39.7 billion to ¥ 56.5 billion due to reduced costs.

Although Sony’s sensor business is impacted by US sanctions, the company announced that it will continue to invest in artificial intelligence and 3D sensing as part of its core strategy.

Sony added it would not cut its research and development spending ahead of schedule as it aims to meet the needs of smartphone customers and maintain and increase its “future technological competitive advantage”.

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