Struggling To Deliver PS5 PlayStations Sony Now Being Attacked By Samsung
Sony who is struggling to deliver their new PS5 gaming consoles are now in a head on battle with Samsung who are looking to strip the Japanese Company of sales in one of their most profitable categories, image sensors.
This year Sony chalked up $9.58 billion in image sensor sales before the restriction of supplies to Huawei hit, they are estimated to have accounted roughly for 20% of the total revenue.
Samsung who destroyed Sony’s flat screen TV business after a joint venture went pear shaped is looking to strip share away from Sony’s sensor business which up until now has dominated the camera and smartphone markets.
Sony’s stronghold in the global market for image sensors is well known with the business taking up to 60% of the global market, Samsung is already at 18.1%, according to British research company Omdia.
Now Samsung who have built their own sensor which is found in their new Galaxy smartphones believe that they have a superior offering and can compete on price.
A major problem for Sony, is that they chose to cuddle up with Chinese brand Huawei with the PS5 manufacturer prioritising the supply of image sensors to Huawei and other Chinese phone brands who are now losing market share because of US bans on Chinese Companies and a backlash by consumers against smartphone brands such as Oppo, Realme, Huawei, and Vivo.
While competition for 5G smartphones is increasing, the struggles for leadership in the image sensor market are also intensifying.
“Sony maintains a cautious stance, while Samsung is going on an investment offensive as if now is their chance,” said an official with a supplier of equipment used in the production process of image sensors. “The two companies are demonstrating totally different moves.”
The comment followed Samsung winning several large orders in August and September for their new ISOCELL image sensor.
When asked about their problems supplying Huawei a Sony executive said.
“It’s not what we expected”.
Sony, who are struggling in several markets including TV and audio remain cautious about the future of its sensor business.
Huawei is the second-biggest user of Sony-made sensors after Apple.
Sony has requested a waiver from the U.S. government that would allow it to supply the devices to Huawei.
But it is uncertain whether its shipments to the Chinese telecommunication equipment maker would return to the pre-restriction level.
According to the Nikki Asia, Samsung who is now supplying Apple and Huawei on a limited scale is also supplying Xiaomi and Vivo, which are boosting smartphone production in expectation of demand for alternatives to Huawei versions.
Analysts claim that Samsung, is highly likely to benefit from the rise of smaller Chinese smartphone makers.
Sony, for its part, has a strategy for meeting Samsung’s challenge. “We will strive to expand and diversify our customer base looking ahead to fiscal 2021, ” Hiroki Totoki, the company’s executive deputy president, said at a press conference in October. “Recovery of profitability is expected in earnest in fiscal 2022.”, he added.
But one analyst familiar with the matter said it will be difficult for Sony to “fully make up for a drop in supplies to Huawei with an increase in sales to other companies this business year.”
Sony draws demand for its sensors because of their overall technological advantages such as fast-reading and low-noise performance. Having developed a 180-million-pixel sensor, Samsung is emphasizing the high pixel number and use of the sensor in its own smartphones as well as Xiaomi’s as a marketing strategy.
“Sony’s sensor may not answer the demand needs of (smartphone) makers pursing a high number of pixels,” said Tetsuo Omori, senior analyst at Japanese research company Techno Systems Research.
As its biggest strength, Samsung is an integrated electronics producer covering memory chips all the way to electronics manufacturing, while Sony focuses on image sensors in its semiconductor business. Samsung logs 10 times more in sales in its chip business while applying its cutting-edge production technology to image sensors. In procurement of production equipment and materials, furthermore, it enjoys the advantage of scale.
Producing electronic parts for use within its group, Samsung is also improving entire camera module quality including for image sensors.
In addition, Samsung produces high-definition organic electroluminescent panels, indispensable to smartphones, on its own and offers them in a wide price range under the Galaxy brand.
Samsung, as the biggest smartphone maker in terms of global market share in 2019, can also adjust supply and demand for image sensors and make them friendlier to users through combination with smartphones.
Analysts claim that Depending on global developments, Sony may fall into a vicious circle in which it turns cautious about investment in the absence of expectation of solid demand, resulting in a loss of competitiveness. If that happens, Sony may see its long-held stronghold crumble.