Sony Group is reorienting to focus on the entertainment sector and plans to sell its subsidiary specializing in mobile connectivity semiconductors in Israel.
Sony Semiconductor Israel, with an annual revenue of about $80 million, was valued for sale at nearly $300 million during the early stages of undisclosed negotiations.
MAIN CONTENT
Sony is preparing to sell Sony Semiconductor Israel as a first step in restructuring its business strategy.
In 2023, Sony undertook a financial separation through a direct listing, the first breakthrough in Japan.
Shifting from technology business to focusing on entertainment accounts for 60% of last year's profits.
What reasons does Sony have for wanting to sell Sony Semiconductor Israel?
Sony is building a new business strategy aimed at the entertainment sector, spin-off some technology sectors to concentrate resources. Selling Sony Semiconductor Israel supports restructuring and optimizing cash flow for core activities.
Sony Semiconductor Israel, formerly Altair Semiconductor, specializes in developing mobile connectivity chips for smart devices like watches and measurement devices. In 2016, Sony spent $212 million to acquire this company.
IDC's industry analyst noted that this move shows Sony wants to enhance cash flow from the highly profitable entertainment sector, instead of maintaining smaller sectors in chip technology.
Sony Group is reshaping its strategy to focus on areas with sustainable growth, prioritizing entertainment over older tech units.
Kenji Saito, Technology Industry Expert, 2023
How will the sale of Sony Semiconductor Israel impact the chip market?
Sony Semiconductor Israel is expected to attract the attention of many major investors in the chip and finance industries if the deal is successful. The company owns connectivity chipset technology for many rapidly developing IoT devices.
The annual recurring revenue of Sony Semiconductor Israel is about $80 million, with the current valuation of nearly $300 million reflecting growth potential and existing profits.
This information also prompts many competing companies and financial investment funds to prepare to increase negotiations to expand or supplement network connectivity technology for their products.
What other strategic pivot is Sony undertaking this year?
In 2023, Sony undertook a partial separation of its financial division through a direct listing, marking the first event of a direct listing and large-scale stock separation in Japan.
According to Reuters, Sony will allocate over 80% of its shares in Sony Financial Group as stock dividends to shareholders, promoting transparency and capital management efficiency between the financial sector and other business sectors.
The direct listing method without a traditional IPO helps Sony minimize risks and costs, paving the way for the separation of this complex capital group.
Partial spinoffs allow large Japanese firms to end conglomerate discount while benefiting from tax efficiencies.
Hideki Somemiya, CFO of Resonac, 2023
Comparison before and after Sony's restructuring
Criteria Before Restructuring After Restructuring Business Focus Multi-industry, technology and entertainment Focus on the entertainment sector accounting for 60% of profits Main income from semiconductor sector Revenue $80 million, low profit margin Selling semiconductor subsidiary in Israel, receiving $300 million Financial management Consolidating all business sectors Financial separation, first direct listing in Japan
Frequently Asked Questions
Who is Sony Semiconductor Israel and what is its role in Sony?
Sony Semiconductor Israel, formerly Altair Semiconductor, specializes in producing mobile connectivity chips for smart devices, supporting Sony's IoT and connectivity technology.
Why did Sony decide to sell this semiconductor chip division?
Sony focuses on shifting to entertainment with high profit margins while needing capital to strongly develop its film, music, and gaming sectors.
What is the direct listing that Sony undertakes?
A direct listing is a method of selling shares to the market without the need for a traditional IPO, helping to save costs and risks for the company.
Does the sale of Sony Semiconductor Israel affect the global chip market?
The sale could increase competition and focus new investments in the chip industry, attracting more major investors.
How much equity does Sony retain in the financial sector?
Sony holds about 20% of the shares and operates the brand franchise for this financial entity.
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