A Boon In Demand For Home Entertainment Prompts Sony To Raise Profit Outlook By A Third

The Japanese electronics and media giant Sony Corp said that it was not being able to cater to the increased demand for the new PlayStation 5 caused by the Vodi-19 pandemic because of a global shortage of critical semiconductors while it raised the full year profit outlook by one third based on better demand.

The Japanese company expected to sell more than 7.6 million consoles of the PS5, which it had launched in some of the key markets of the company in November last year, by end of March, said Sony on Wednesday.

In the United States and Japan, the PS5 console which is prices at as much as $500 a unit saw huge demand as the product got sold quickly soon after it was launched on online retail sites because of pent-up demand for videogames form consumers who were stuck at home because of restrictions and the lockdowns imposed by governments to prevent the spread of the pandemic.

According to analysts and the company, it is also expected that the trend of consumers shifting to the new games console will also encourage them to move to online downloads or subscription services which would in turn help the Japanese company to increase the profitability of the gaming business of the company.

A global shortage of demand for crucial s3emiconductors which has already caused disruptions in production for a variety of industries using them – ranging from smartphone makers to car companies, had also hurt Sony’s production as the company was finding it difficult to match demand of its new console, Sony warned.

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

In the 12 months through March, the Japanese company expects to make an operating profit of 940 billion yen ($8.95 billion) compared to 700 billion yen that the company had predicted earlier.

Starting late October, some shipments of sensors to customers in Chins has been restarted by it, Totoki also said.

The sanctions and restrictions imposed by the United States on the sale of chips by Chinese smartphone maker Huawei Technologies Co Ltd that make use of American technology had initially caused worries for Sony of the sanctions also impacting it. Huawei was forced to announce the sale of its budget-brand smartphone maker Honor in November. Several deals with chip suppliers and component makers, including Sony had been signed by it after the spin-off, Honor said last month. According to analysts, accounting for about one fifth of its $10 billion in revenue generated from image sensors, Huawei was its second largest customer for the sensors for Sony after Apple Inc.

There was a 20 per cent year on year jump in the operating profit for Sony for the third quarter at 359.2 billion yen. According to an estimate of six analysts surveyed by Refinitiv, the market expected to post an operating profit of 179 billion yen for the said quarter.

(Adapted from Reuters.com)


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