(news & commentary)
Sony yesterday announced that it will create a new separate company called Sony Semiconductor Solutions. This spinout from Sony Corporation will include the sensors, the LSI design group, plus other semiconductors that Sony makes for themselves and others. The groups that are being spun out into the new entity provided 11% of Sony’s sales and half their profits in the past quarter. The new entity should begin operations as a standalone company in April 2016.
While some might be surprised by this move, it’s part of a reorganization strategy that was announced in February of this year. By creating a new separate company, Sony is likely to be able to better attract low cost investment for the growing unit. Meanwhile, the remaining components--including cameras--under the main Sony Corporation structure are now under more pressure to perform.
I think Sony President Kazuo Hirai is moving towards a complete umbrella organization: everything spun out as separate companies using a holding-company type structure. This allows rapid divestiture of poorly operating units, as Sony did with the Vaio PC group, and puts more accountability and control into the hands of managers in the individual units.
Already, I’m seeing speculation that probably isn’t warranted. For example, one site is reporting this might give Canon the ability to select Sony sensors for their cameras. Canon already uses some Sony sensors for some cameras. But in terms of the DSLRs and most important cameras, I’ve seen nothing that indicates that Canon would change their sensor strategy.
Other sites are wondering when the camera group (video and stills) will be spun out and whether that will change anything. I think it’s a given that the camera group will eventually be spun out, and that does have some implications on decisions there. Alpha mount is already what we call “walking dead” in the investment community, and I think it will be buried at some point in the not too distant future. Why? Sony corporate is demanding better and higher profits and the discontinuation of underperforming assets. The E-mount is now integral to both the video and still offerings of the group, and is the place where there is both growth and customer recognition. The A mount nets them less return on investment than anything else the group is doing. We may see a few remaining A mount products that were already in development make it to shelves in the coming year, but I’m not hearing about new A mount R&D and investment.
Meanwhile, still other sites are speculating on what it means for availability of Sony sensors to other companies, ranging from Fujifilm to Ricoh. Probably not a lot of difference. Money has always talked when it comes to Sony imaging sensors. Nikon has probably been the largest long-term customer of Sony Semiconductor, and has long had very close, intertwined ties with them. I doubt anything changed in any truly substantive way for any of the camera companies using Sony sensors.
What is changing is that the Sony Semiconductor Solutions fabs are mostly churning out smartphone, security, and other sensors these days, not sensors for standalone cameras. As camera volume has gone down, mobile sensor volume has skyrocketed. There’s a chance that camera sensor production is getting squeezed now. Still, you may remember I wrote about Sony Semiconductor’s forecast: they believe they’ll be making more than three-quarters of the camera sensors used in 2017/8.
