The latter part of 2015 and well into 2016 has been a bit of a rollercoaster for smartphone manufacturers and the industries that have become so reliant on them, like chip makers. Though a decade ago under its previous CEO, it would have been blasphemous for Sony to make components for its competitors, under Kaz Hirai, Sony smartly began producing its CMOS sensors for Apple, Samsung, and other vendors which has been extremely lucrative for them – that is, until smartphone sales for the entire industry began to slow down.

Makiko Yamazaki writing for Yahoo Finance:

 Sony Corp’s image sensor production will return to full capacity in the October-March half-year due to a pickup in smartphone demand, having spent part of the past year running just under full strength, the head of its chip-making subsidiary said. 

As Yamazaki notes:

 Sony commands about 40 percent of the market for complementary metal-oxide semiconductor (CMOS) image sensors, a type of chip that converts light into electronic signals 

and any slow down, let alone a massive one, would and did greatly affect the division’s profitability. To make matters worse, Sony’s factory was hit by a massive earthquake around the same time which slowed down their ability to produce sensors for traditional cameras. For its part, Sony is looking to expand their clientele which should help them better stabilize their business.

 Samsung’s first-half mobile profit rose nearly 50 percent on strong sales of its Galaxy S7 phones, but its momentum has stalled due to the recall of its follow-up Galaxy Note 7. Apple meanwhile booked its first-ever iPhone quarterly sales declines, but subsequently enjoyed a stronger-than-expected launch of its iPhone 7. 

President Yasuhiro Ueda of Sony Semiconductor Manufacturing Corp:

 Our client portfolio is getting less reliant on specific customers, as we are adding Chinese smartphone makers that are recently thriving 

This is a smart move by Sony but hopefully the company will take their sensors and expand well beyond smartphones and into other areas like drones and automobiles. The latter will especially be lucrative as each automaker strives to bring to market smarter cars that are full of sensors which will eventually pave the way for full autonomous vehicles.

Discuss:

Do you think smartphone sales are recovering or is the segment beginning to mature as a whole?