Sony Eyes Sensors in Wearable Computers to Gesture TVs

Sony Eyes Sensors in Wearable Computers to Gesture TVs

Sony Corp. (6758) is considering applying its image sensors to wearable computers and hand-gesture TVs for growth 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)’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.

Surging Shipments

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) is ranked second with 14.4 percent, followed by Samsung at 12.9 percent.

‘Robust Orders’

“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 fell 0.8 percent to 2,023 yen as of 9:23 a.m. in Tokyo. The stock has more than doubled this year, compared with a 33 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’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.

Apple, Samsung

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.”

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.

Autonomous Vehicles

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.”

To contact the reporters on this story: Mariko Yasu in Tokyo at; Grace Huang in Tokyo at

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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