Sony weighs chip unit spin-off as it plans to focus on entertainment: Sources

Sony Group Corp is considering spinning off its semiconductor unit, according to people familiar with the matter, marking the PlayStation maker’s latest effort to streamline its business and focus on entertainment.

The spin-off and listing of Sony Semiconductor Solutions Corp may occur as soon as this year, the people said, asking not to be named discussing a private matter. Sony is considering distributing the bulk of its holding in the chip business to shareholders, and may retain a minority holding after the spin-off, one of the people said. 

Deliberations are ongoing and the plan may change, especially given the volatility of markets in the wake of US President Donald Trump’s tariffs, one of the people said. 

Sony American depositary receipts rose 1.2 per cent to US$25.28 on April 28, climbing to their highest level since March 31. Tokyo markets were shut on April 29 for a holiday.

“This article is based on speculation and there are no concrete plans,” representatives for Sony and the chip unit said in an e-mail.

The company, which is also planning to spin off its financial arm, is following some of billionaire investor Dan Loeb’s playbook to unlock billions of dollars in shareholder value, years after resisting pressure from Loeb’s Third Point LLC for the company to do so. The fund sold its Sony American depository receipts in 2020. 

For the chip business, which makes industry-leading image sensors that go into cameras inside Apple Inc and Xiaomi Corp phones, a spin-off could give it greater flexibility to make faster business decisions and raise funds. Sony derived an estimated 1.7 trillion yen (S$16 billion) in sales last fiscal year from that division, though it’s unclear if the company intends to spin off the entire unit.

Its growth has stalled in recent years because of sluggish global smartphone demand – with US tariffs further weighing on the sector’s outlook. Sony’s semiconductor business also faces declining margins, higher costs and new competition from Chinese chipmakers who are catching up.

Operating profit margins at Sony’s imaging and sensing solutions segment has been steadily declining from about 25 per cent to a little over 10 per cent over the years. In contrast, Sony’s gaming and music segments have led profit growth in recent quarters, with operating income growing by 37 per cent in games and 28 per cent in music in the December quarter. BLOOMBERG