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23h ago
INTERNATIONAL – Sony Corp. has cut its estimated production of PlayStation 5 for this fiscal year by 4 million units, to around 11 million, following production problems with its system-on-chip custom-designed for the new console, according to people familiar with it. with the matter.
In July, the Tokyo-based electronics giant increased orders with vendors in anticipation of increased demand for games in the holiday season and beyond as people spend more time at home due to the coronavirus. But the company has faced manufacturing issues, such as production yields as low as 50% for its SOC, which have reduced its ability to produce as many consoles as it wants, said the people, who asked to remain anonymous due to deliberations. . they are not public. Yields have been gradually improving, but have not yet reached a stable level, they added.
Shares of Sony erased gains and closed down 2.4% on Tuesday, their lowest level since July. A Sony spokesperson declined to comment.
“If the news is accurate, we would view the reduction as negative,” wrote Citigroup analysts, including Kota Ezawa, in response to Sony’s revised production targets report. Analysts also noted that challenges with SOC returns would increase the cost of the component and affect profit margins. Sony’s reduced forecast is only an estimate and could be revised again before the end of the fiscal year in March 2021.
Last week, close rival Microsoft Corp. revealed aggressive pricing for its two next-generation consoles, the $ 299 Xbox Series S and the $ 499 Xbox Series X, putting additional pressure on Sony. Pre-orders for the new Xbox models begin on September 22. Sony is expected to reveal its own launch and pricing plans for the PlayStation 5 during an official video presentation scheduled for Wednesday. The full PS5 console can be priced as low as $ 449, while the slimmer digital version can drop below $ 400, according to Bloomberg Intelligence analyst Masahiro Wakasugi.
Sony started the year with conservative manufacturing plans for the PS5 and has been grappling with the question of how to price the next console update. The Covid-19 pandemic led to an upward revision of the company’s projections, as it saw faster adoption of its PlayStation Plus subscription service and record sales of the summer releases The Last of Us: Part II and Ghost of Tsushima.
Nintendo Co. plans an upgraded version of its Switch console, equipped with better components and potentially 4K output, by 2021. It is expected to be accompanied by a list of big name new games, challenging efforts by Sony and Microsoft to get more gamers. sign up. for their services.
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