Sony Raises Nearly $4 Billion to Ramp Up Sensors Business

In a move that caught investors by surprise, Sony has announced that it has raised nearly $4 billion in order to ramp up its sensor business. Sony was able to achieve the large sum by issuing new shares and bonds. In fact, this has been Sony’s first new share issue in 26 years and values at nearly a tenth of what the company is currently worth. In just the past year, Sony’s value has nearly doubled to $35 billion.

So what exactly will Sony do with the $4 billion in hand? Those details after the jump.

While PlayStation has proven to be a worthy division of Sony as it continues to outpace rival Xbox, other parts of company like their mobile and television business continue to struggle. Despite lackluster results from mobile which at one pointed was set as one of the three main pillars of Sony, the companies sensor business has been doing gangbuster which is used in their own mobile products.

But what’s truly driving growth for their sensor business isn’t coming from Sony’s own use and instead from rivals like Apple and others who use the sensor to power their smartphones and compact cameras. In recent years, Sony has also been able to find medical applications for their sensors, which have helped with next-gen Xray machines.

With more high-tech cars, automotive companies have also been buying Sony sensors in droves to power their rear parking cameras and onboard systems. With the advent of self-driving cars, or at least more-aware cars, demand for Sony’s sensor business will likely grow even at a faster rate. In fact, according to a Sony executive, demand for sensors has been so strong that they’ve been struggling to keep up.

Unlike other parts of Sony like PlayStation or Sony Pictures, developing sensors requires constant R&D which comes with a heavy price tag. With Sony’s balance sheet already stretched as it restructures, the company needed to look at other ways to continue to fuel their dominance. From Sony

In addition to securing funds for active and concentrated investment in businesses that are driving growth. Sony … aims to secure its ability to make future further investment.

With the cash infusion, Tomoyuki Suzuki, head of Sony’s device solutions business said that he expected

sensor sales to grow by nearly a quarter to 550 billion yen in the year ending March.

If Sony can continue this feverish pitch at developing cutting edge sensors thats used in a vast range of products, they might finally have that missing ingredient to help fund their other divisions. As an example, rival Samsung while known to the public as the makers of Galaxy devices and washer/dryers also makes a lot of key components for mobile products like flash memory and processors. Most famously, Apple heavily relies on Samsung as a major component provider of the iPhone. In turn, Samsung has been able to take that money and invest it in their own mobile division which had for a while been able to compete in terms of sales with Apple though that division has fallen heavily in the past two years with sales down nearly 60%.

Sony till now had lacked a less visible but highly profitable product and instead mostly relied on selling their own products which haven’t been selling well in years. With their image sensor business, Sony might finally have the opportunity at having a product that sells in high volumes and helps drive the company’s revenues even higher while also being profitable.

With that double whammy, Sony can, like Samsung has done in the past, profit from its competitors and in turn, invest in its own products to better compete with them.