Many investors focus on Sony's (NYSE: SNE) PlayStation 5, which is scheduled to arrive in late 2020, as the company's next big earnings catalyst. However, a new growth engine is emerging in the shadow of Sony's gaming business: its oft-overlooked semiconductor unit, which mainly produces image sensors for cameras.
Demand for image sensors has been soaring over the past year, thanks to new smartphones with higher-quality cameras and multi-camera setups. Sony's semiconductor chief Terushi Shimizu recently stated that the unit still "can't make enough" image sensors to satisfy market demand, according to Bloomberg, even as it runs its manufacturing plant 24 hours a day.
To meet that demand, Shimizu stated that Sony would double its capital spending on the semiconductor unit to 280 billion yen ($2.6 billion) this fiscal year and that it was building a new plant in Nagasaki, Japan, which would come online in April 2021. Let's see why this business will remain Sony's core growth engine until the PS5 arrives.