Sony Shifting Smartphone Production From China To Thailand
Zacks Investment Research | Mar 27, 2019 10:12PM ET
According to a Reuters report, Sony Corporation (NYSE:SNE) is transferring its smartphone production facility from China to Thailand to improve its profitability amid waning sales. The strategic move is the latest in a string of concerted efforts to attain a leaner organizational structure to augment growth.
Over the past few quarters, Sony has reported dwindling sales from its smartphone business. Mobile Communications (“MC”) sales in third-quarter fiscal 2018 declined 36.9% to ¥137.2 billion due to decrease in smartphone unit sales mainly in Japan, Europe and Latin America. The segment’s operating loss was ¥15.5 billion against income of ¥15.8 billion in the prior-year quarter.
Sony faces intense rivalry in the smartphone division from low-price manufacturers as well as premium handsets like that of Apple Inc. (NASDAQ:AAPL) iPhone and Motorola Solutions, Inc. (NYSE:MSI) . The smartphone market witnesses stiff price wars, continuous product innovations and changing customer preferences, which is putting immense pressure on Sony to come up with better products to retain competitiveness.
In order to buck the trend of decreasing sales, Sony has now decided to come up with intensely price-competitive products by shifting its production facility to low cost Thailand. The company aims to turn the smartphone business profitable from April 2020.
Also, Sony has orchestrated a slew of changes in its internal administration and reshuffled its operating segments. The company believes that converting its business units into distinct subsidiaries will enhance its organizational independence as each independent unit sets high targets in an effort to accomplish the company’s mid-term targets. Sony believes that these steps will allow it to generate sustainable profit, accelerate decision-making processes and reinforce business competitiveness, which augurs well for future growth.
Sony has further undertaken a number of measures in its Branded Product Business, which includes MC, Imaging Product & Solutions and Home Entertainment & Sound segments, to ensure stronger growth. A number of measures, including cost-cutting initiatives, lower exposure in low-profit geographic regions and reduction in advertising & promotion expenses, are expected to benefit this business in the long run. Going forward, Sony plans to concentrate mainly on the premium segment of the branded products market to maximize its growth potential. Also, the company has launched a few products, which will likely supplement sales in the long run. Within the HE&S segment, it is presently focusing on high value-added models such as 4K TVs, to improve the product mix.
The stock has outperformed the Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.