Sony raises outlook amid home entertainment boom, but struggles to build more PS5s

Japan’s Sony Corp raised its full-year profit outlook by one-third, helped by pandemic-fuelled demand for games, movies, and other content, but said it was struggling to build enough PlayStation 5 consoles amid a global shortage of semiconductors. 

The electronics and entertainment conglomerate said on Wednesday some customers may have to wait longer for their consoles as it competes for chips with other businesses ranging from smartphone makers to car companies.

“It is difficult for us to increase the production of the PS5 amid the shortage of semiconductors and other components,” Chief Financial Officer Hiroki Totoki said at a press briefing.

Sony expects to sell more than 7.6 million PS5 consoles by the end-March, he added.

PS5, which sells for as much as $500, quickly sold out after its launch on online retail sites in the United States and Japan in November, thanks to demand for videogames from people stuck at home due to coronavirus lockdowns.

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The shift to the new games console is also expected to encourage gamers to move to online downloads or subscription services, helping Sony boost the profitability of its gaming unit.

Sony now expects 940 billion yen ($8.95 billion) in operating profit in the 12 months through March compared with the 700 billion yen it previously forecasts.

Totoki also said Sony had resumed some shipments of image sensors to customers in China from late November.

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Sony had worried about the potential impact on its sensor business following US restrictions on sales of chips using US technology to Chinese smartphone maker Huawei.

In November, Huawei revealed plans to sell its budget-brand smartphone maker Honor. After the spin-off, Honor last month said it had signed deals with chip suppliers and component makers, including Sony.

Huawei was Sony’s second-largest image sensor customer after Apple Inc, accounting for about a fifth of its $10 billion in sensor revenue, according to analysts.

Sony’s operating profit for the October-December quarter jumped 20% to 359.2 billion yen from a year ago, well past a consensus 179 billion yen estimate from six analysts surveyed by Refinitiv.

Historically better known for hardware like the Walkman music player and TVs, Sony has invested heavily in recent years in beefing up its entertainment offerings while streamlining its consumer electronics business.

This year it plans to close a factory in Malaysia that manufactures home audio equipment, headphones, and other products.