Sony to reduce TV and smartphone orders to Taiwan production partners
Max Wang, Taipei; Steve Shen, DIGITIMES [Monday 23 March 2015]
In the wake of continued slow sales of its LCD and smartphone products, Sony is expected to lower the sales ratio of low-margin products and thus will adjust its outsourcing policy, a move which will affect Taiwan-based ODM/OEM partners, including Foxconn Electronics, TPV Technology and Arima Communications, according to industry sources.
Sony expects its mobile communication business unit to generate revenues of JPY900-1,000 billion (US$7.497-8.33 billion) in fiscal 2017 (April 2017-March 2018), down from JPY1.32 trillion projected for fiscal 2014, but operating margin will improve to 3-5% compared to a negative 16.3% during the same period.
Meanwhile, it also expects its home entertainment and sound business unit to contribute revenues of JPY1-1.1 trillion in fiscal 2017, down from JPY1.2 trillion in 2014, while operating margin will improve to 2-4% from 1.1% during the same period.
Sony has been outsourcing entry-level LCD TVs and smartphones to Taiwan-based production partners, while producing most of high-end products in-house. Thus, a reduction of sales ratios of low-margin device to total sales will also mean a reduction of ODM/OEM orders to Taiwan partners, said the sources.
Sony has almost placed no TV orders to Foxconn for the first half of 2015 compared to several million units it did in previous years, said the sources, adding that Sony is likely to slash its TV orders to TPK to only 1-2 million units in 2015.
Sony is also expected to reduce its orders for entry-level to mid-range smartphones to Arima in 2015, said the sources.
Sony shipped 14.5 million LCD TVs and close to 40 million smartphones in 2014.
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