Sony Corp. (6758) is considering applying its image sensors to wearable computers and hand-gesture TVs as it expects smartphone revenue to peak around 2015.
The company plans to seek growth in developing the chips, already used in smartphones and digital cameras, for products such as self-driving cars and medical equipment, Yasuhiro Ueda, senior vice president for Sony’s image sensor unit, said in an interview.
Sony has garnered almost a third of the $7.6 billion market for the low-power chips, known as complementary metal-oxide semiconductors, that quickly capture crisp snapshots in high-end smartphones, a market that is nearing saturation. The company sells CMOS to others, with versions in Apple Inc. (AAPL:US)’s iPhones 5 and 4S and Samsung Electronics Co. (005930)’s flagship Galaxy S4, according to SMBC Nikko Securities.
“We have a high sense of crisis after seeing the high-end smartphone market start to saturate this year,” Ueda said yesterday at Sony’s technology center in Atsugi, near Tokyo. “Our plan is to draw a growth strategy in an area where we see shipment potential of 10 billion units a year.”
Sony’s Exmor image sensor works as an eye for electronic products, capturing light to convert into electronic signals for processing. The latest chip uses less power and faster processing to catch vivid images under low light.
Chief Executive Officer Kazuo Hirai has said the company plans to leverage the technology to expand in medical equipment business. The chips can be offered for endoscopes used to look inside body cavities and medical testing devices, Ueda said.
Worldwide CMOS shipments rose 25 percent to 2.5 billion units last year and may show a similar increase this year, according to an estimate by Techno Systems Research Co. That may slow down to about 11 percent in 2015, according to the Tokyo-based researcher.
Sony’s revenue from the chips probably rose to $2.45 billion in 2012 from $1.89 billion a year earlier, garnering 32 percent of the global market’s sales, according to estimates made by Techno Systems. Omnivision Technologies Inc. (OVTI:US) is ranked second with 14.4 percent, followed by Samsung at 12.9 percent.
“Sony’s CMOS business, which has seen robust orders from smartphone makers may be reaching a turning point as demand shifts toward middle- to low-end handsets,” said Ryosuke Katsura, an analyst at UBS AG in Tokyo. “There will be a higher risk going forward for the business” unless it finds a new growth driver, the analyst said.
Sony rose 0.9 percent to 2,059 yen as of the close of trade in Tokyo. The stock has more than doubled this year, compared with a 34 percent gain in the Topix index.
Global smartphone revenue will rise 22 percent in 2013, or nearly half the pace of an expected 41 percent gain in shipments, amid falling prices, according to UBS.
Sony unveiled its Xperia Z1 smartphone today at the IFA consumer electronics show in Berlin. The phone will be available this month, equipped with a 20.7 megapixel camera and a free download of the movie “Elysium.”
Sony’s device division generated operating profit of 10.9 billion yen ($110 million) in the June quarter with most of the earnings generated by sales of the chips, Deutsche Bank AG estimates. The division was the biggest source of profit after its insurance business.
Ueda declined to elaborate on revenue and profit from its image sensors.
Sony started developing image sensors in 1970 as it tried to compete with Eastman Kodak Co. in photographic devices. The Tokyo-based company’s first such chip was used in a camcorder before the growth driver shifted to digital still cameras and smartphones, Ueda said.
Future growth may come from devices such as Google Inc.’s Glass, a set of Web-enabled eyewear, according to Ueda. Apple and Samsung’s planned watch devices may lift sales of wearable gadgets to 70 million units in 2017 from 15 million this year, according to Juniper Research.
“Image sensors will be crucial device for wearable computers,” Ueda said. Sony is “very keen to expand our business in this area.”
Sony’s SmartWatch 2 will hit stores worldwide later this month, and will be able to be used as a second screen for the Xperia smartphone, the company announced today in Berlin.
Samsung may unveil a wristwatch-like device named the Galaxy Gear that can make phone calls and surf the Web and handle e-mails, people familiar with the matter said last month. Cupertino, California-based Apple has a team of designers working on a watch-like device, two people familiar with the matter said in February.
Nissan Motor Co. (7201) plans to deliver fully autonomous vehicles to the market by 2020, Andy Palmer, the automaker’s executive vice president, said last month. Technology underpinning autonomous cars, including adaptive cruise control and electronic steering is already available, and added sensors and road-monitoring capabilities are being refined, Palmer said.
Self-driving cars are currently legal in three U.S. states and may offer a revenue opportunity of more than $200 billion, according to a June report by Piper Jaffray & Co.
“If you want to make self-driving cars, you need several sensors in the car,” Ueda said. “Hand-gesture TV sets may see a booming demand, while house-clean robots can probably do a better job if image sensor was added.”
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