Market news: Sony considers spinning off semiconductor business for independent listing as early as this year

According to media reports, Sony Group is considering spinning off its semiconductor business. This would be the latest move by the company to streamline its operations and unlock asset value.

As background, Sony's semiconductor business (Sony Semiconductor Solutions Group) primarily supplies advanced image sensors to mobile phone producers such as Apple and Xiaomi, as well as various camera producers. According to information on the company's official website, Sony's image sensors account for 53% of the global market share (by value), and the company is working to increase this figure to 60% this year.

However, the issue lies in the fact that the operating profit margin of Sony's Imaging & Sensing Solutions segment has declined from approximately 25% to slightly above 10%, with the growth rate of this segment increasingly lagging behind that of the gaming and music segments, which are the company's growth engines.

In Q4 last year, Sony's gaming business achieved an operating profit of 118.1 billion yen, representing a YoY growth rate of 37.1%; the music business also saw its operating profit grow by 27.9% YoY. Meanwhile, the revenue and profit of the Imaging & Sensing Solutions business declined YoY.

(Source: Sony's financial report)

According to sources familiar with the matter, the spin-off and listing of Sony Semiconductor Solutions Corporation could take place as early as this year. Sony is considering allocating a majority stake in its chip business to shareholders and may retain a minority stake after the spin-off. However, given the market volatility triggered by former US President Trump, plans may still change.

In response to the latest reports, a spokesperson for Sony's semiconductor division declined to comment on market speculation. According to its schedule, Sony will release its fiscal year 2024 annual report, covering the period up to month-end March this year, on May 14.

It is worth mentioning that years ago, US activist investor Dan Loeb pointed out that by simply spinning off non-core businesses such as finance, Sony could unlock billions of US dollars in shareholder value for investors, but the company has consistently resisted such demands. As a result, Loeb's Third Point fund ultimately cleared its position in Sony's American Depositary Receipts in 2020.

For Sony's chip business, a spin-off would enhance flexibility in business decision-making while also raising capital. The recent weakness of this segment is closely tied to the sluggish global demand for smartphones, and US tariff measures have also increased uncertainty in the industry's outlook.