Sony Corporation of Japan plans to make fresh capital investments worth ¥120 billion ($1.2 billion) to double the production of advanced image sensors used in digital cameras and mobile phones, although it will outsource production of some other lines of business.
The consumer electronics giant said that beginning next fiscal in April 2011; it will manufacture 50,000 units of image sensors globally in a month from the present 25,000.
The proposed investment is an exception since Sony – under the stewardship of Sir Howard Stringer, has cut thousands of jobs, closed four out of its eights television factories and outsourced production to low cost Asian destinations.
By the end of current fiscal in March 2011, Sony would have outsourced half of its manufacturing needs from 20 percent reported a year earlier. Sony hopes that the new ‘asset light’ approach will help its television business to return to profitability. Its TV business has been making losses for the last seven years.
However, Sony will continue focusing on technologies in areas it feels it has a leadership position and competitive advantage. Executive Vice-President of Consumer Electronics division – Hiroshi Yoshioka had identified cameras as one of those areas last week and said the company will handle everything “from imagers to lenses to set assembly”.
Sony supplies its high end CMOS (Complimentary Metal-Oxide Semiconductor) chips to other manufacturers and uses them in-house to power Handycams, Still cameras and mobile phones. It’s the world’s second biggest camera maker after Canon.
Vertical integration in cameras is Sony’s best strategy given the company’s control over proprietary technology. While in television the rapid fall in flat screen panels have changed the game and companies with economies of scale can only turn profitable.
Outlining Sony’s strategy, he said: “Sony isn’t going to go to the extreme in either direction; we’re going to decide business-by-business”.
In an effort to bolster its image sensor business, Sony will buy back a plant in Nagasaki it sold to Toshiba in 2007. The deal was announced on Friday and part of the factory will be converted to produce CMOS image sensors.