Sony scrambles to meet demand for image sensors
Smartphones’ focus on cameras drives customers to upgrade.
Sony Corp. is working around the clock to manufacture its in-demand image sensors, but even a 24-hour operation hasn’t been enough.
For the second straight year, the Japanese company is running its chip factories constantly through the holiday season to try to keep up with demand for sensors used in mobile phone cameras, according to Terushi Shimizu, head of Sony’s semiconductor unit.
The electronics giant is more than doubling its capital spending on the business to $2.6 billion this fiscal year, which ends in March, and is building a new plant in Nagasaki that will come online in April 2021.
“Judging by the way things are going, even after all that investment in expanding capacity, it might still not be enough,” Shimizu said in an interview. “We are having to apologize to customers because we just can’t make enough.”
It’s now common to see three lenses on the back of a phone as manufacturers lean on camera specs to nudge customers into upgrading. The latest models from Samsung Electronics Co. and Huawei Technologies Co. boast resolutions in excess of 40 megapixels, can capture ultrawide-angle images, and come with depth sensors. This year Apple Inc. joined the fray with a triplecamera iPhone 11 Pro. That’s why even as growth of the smartphone market plateaus, Sony’s sales of image sensors continue to soar.
“The camera has become the biggest differentiator for smartphone brands, and everyone wants their social media pictures and videos to look nice,” said Masahiro Wakasugi, an analyst with Bloomberg Intelligence. “Sony is riding that wave of demand very well.”
Semiconductors are now Sony’s most profitable business after the PlayStation. In October, the company raised its operating income outlook for the chip unit 38% to about $1.8 billion for the year ending in March 2020, after second-quarter profit jumped almost 60%. Sony forecasts revenue from its semiconductor division will climb 18% to about $95 billion, of which image sensors account for 86%.
The company has been plowing much of the profit back into the business, with plans to invest about $6.4 billion in the three-year period that ends in March 2021. Most of the spending will go to boosting monthly output capacity of image sensors to 138,000 wafers, up from about 109,000 now. Samsung, Sony’s biggest rival in this space, says it’s also boosting production to meet demand.
Sony said in May that it controls 51% of the image sensor market as measured by revenue, and is targeting a 60% share by fiscal 2025.
Like many other technological breakthroughs of the late 20th century — including the transistor, lasers and photovoltaic cells — image sensors were invented at Bell Laboratories. But it was Sony who succeeded in commercializing the charge-coupled devices.
Sony is now looking to a new generation of sensors that can see the world in three dimensions. The company uses a method called “time of flight” that sends out invisible laser pulses and measures how long they take to bounce back to create detailed depth models.
This helps mobile cameras create better portrait photos by more precisely selecting the background to blur out, and it can also be applied in mobile games, where virtual characters can be shown realistically interacting with real-world environments. If used on the front of the phone, time of flight sensors allow for hand gestures and facial motion capture for avatars.
Samsung and Huawei have unveiled models with 3-D sensors, and Apple is rumored to be introducing a 3-D camera in 2020. Shimizu said Sony is ready to meet a significant increase in demand next year.
“Once you start seeing interesting applications of this [time of flight] technology,” he said, “it will motivate people to buy new phones.”