TOKYO -- Sony looks to inoculate its semiconductor business against any swings toward a strong yen by improving efficiency and broadening sales of image sensors to ensure more stable demand.
The conglomerate aims to generate 100 billion yen ($900 million) in annual profit from the segment, even when Japan's currency appreciates to 100 yen per dollar.
For the semiconductor segment this fiscal year, Sony assumes a foreign exchange rate of 110 yen per dollar and projects a 120 billion yen operating profit, rebounding from a 7.8 billion yen loss in fiscal 2016.
To bolster resistance to any appreciation in the yen, Sony will cut costs, raise production yields for new offerings and increase sales of image sensors used in automobiles. The moves aim to shield the semiconductor business from highly volatile smartphone demand. Output of image sensors is expected to reach 100,000 a month at the end of March 2018, with the volume rising another 10-20% by 2020.
A stronger yen benefits Sony's overall operations. But for semiconductors, a 1 yen appreciation against the dollar erodes annual profit by 4.5 billion yen.
Sony projects semiconductor profit this fiscal year to trail only the conglomerate's game and financial operations, each seen producing 170 billion yen in profit. The disruption caused by major earthquakes last year in southwestern Japan will be gone from this fiscal year's results, and the prevalence of dual cameras on the back of smartphones creates a tailwind.
Sony holds the leading global market share of nearly 50% in value terms for image sensors, Techno Systems Research says. But competition from No. 2 Samsung Electronics and others is growing.