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Sony gets permission to export image sensors to Huawei after profit forecast cut by 38%

After Sony’s image sensor business suffered a setback and lowered its performance forecast, the market heard that Sony was allowed to export image sensors to Huawei.

The Nikkei Chinese website has learned that Sony has obtained permission to restart transactions before October 29, regarding the U.S. Department of Commerce’s substantial ban on the supply of semiconductor products to Huawei. On the morning of the 30th, Sony officially responded: It does not comment on specific customers or businesses.

Operating profit forecast down 38%

Sony is the leader in image sensors for smartphones, with a global market share of 70%. And because of its leading technology, Sony’s products have been used in high-end smartphones such as Apple. As the second largest customer of Sony’s image sensors, Huawei accounts for about 20% of the sales in this business.

The U.S. Commerce Department’s ban shook the global chip supply chain, with Sony halting sales to Huawei from September 15. On October 28, Sony announced its second quarter financial report for fiscal 2020. During the reporting period, both the revenue and profit of the image sensor business decreased significantly.

As it is estimated that it will still not be able to supply products to Huawei in the second half of fiscal 2020, Sony has adjusted its performance and lowered its operating profit forecast for the image sensor business to 81 billion yen, down 66% from last year.

Can the transaction be restarted?

It’s unclear how far Sony’s sensors will allow supply. On October 30, China Business News quoted sources in Huawei’s supply chain as saying that many key components, including displays and images, will be gradually released.

Despite the U.S. government license, Sony remains cautious about its business prospects with Huawei. Sony said it would not be able to produce the new phone if Huawei could not obtain U.S. approval for purchasing other components. Even if Sony is approved, it is unclear whether the deal will be restarted.

At present, manufacturers including TSMC, MediaTek, Western Digital, SMIC, Macronix, SK Hynix, Samsung and other manufacturers have indicated that they have applied to the United States for continued supply licenses. In the field of image sensors, the latest news shows that domestic supplier OmniVision has also been authorized by the US government.

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It is worth mentioning that although the image sensor business suffered setbacks, due to the strong performance of Sony’s game business, Sony not only exceeded expectations in the second quarter, but also raised its operating profit for the full year. The company expects a net profit of 800 billion yen in fiscal 2020, compared with a previous forecast of 510 billion yen.

U.S. hedge fund ThirdPoint this year asked Sony to sell its image sensor business so it could focus more on entertainment. At present, Sony’s image sensor business is blocked. Whether it will leave the business and further focus on the main game business after that, Global Semiconductor Watch will continue to pay attention.

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