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This excerpt taken from the SNE 20-F filed Jun 23, 2009. Electronics
Sony plans to undertake the following cost reduction measures:
Realignment of manufacturing sites:
By advancing initiatives, including rationalizing its
manufacturing operations, shifting and aggregating manufacturing
to lower-cost countries and utilizing the services of
third-party original equipment and design manufacturers (OEMs
and ODMs), Sony has decided to reduce its manufacturing site
count by eight, four in Japan and four overseas. With
the transfer or closure of these manufacturing sites,
Sony’s total manufacturing site count will be reduced to 49
by December 31, 2009.
Workforce reallocation and headcount reduction:
Through measures including the realignment of its manufacturing
sites, a review of its development and design structure and the
streamlining of its sales and administrative functions, Sony is
implementing a company-wide rationalization of its operations,
including its headquarters functions. Sony is
reallocating and optimizing its workforce through programs
including work reassignments and outplacements. As a
result of these measures, by March 31, 2010, Sony plans to
reduce worldwide headcount within the electronics business by
approximately 8,000, out of approximately 160,000 as of
September 30, 2008. Concurrently, Sony is also
reducing the headcount of its outsourced workforce.
Measures being implemented in the LCD Television and
Semiconductor businesses include the following:
LCD
Television Business
Manufacturing Operations
Design Operations
In connection with Sony’s strategy for procuring panels, an
important issue for improving profitability in the television
business, Sony obtains its supply of amorphous thin film
transistor (“TFT”) LCD panels from the 7th and
8th generation production lines at S-LCD. The
production lines of the 7th and the first
8th generation have a production capacity of 130,000
substrates and 70,000 substrates of mother glass per month,
respectively. Furthermore, S-LCD started operations
at its second 8th generation LCD panel production line in
June 2009. S-LCD plans to expand the capacity of its
second 8th production line to 70,000 substrates of mother
glass per month by the end of December 2009.
Table of Contents
In addition to S-LCD, in order to secure a stable supply of
cost-competitive panels in the mid- to long-term, Sony signed a
non-binding memorandum of intent with Sharp in February 2008 to
establish a joint venture to manufacture amorphous TFT LCD
panels and modules on a 10th generation production
line. On January 29, 2009, faced with the
changes in the world economy, Sony and Sharp amended and
extended this non-binding memorandum of intent to confirm their
mutual intent to postpone the targeted establishment of the
joint venture until March 2010, approximately one year later
than the originally scheduled date of April
2009. Sharp and Sony will, through continued
discussion of how the two companies can best deploy their
resources and expertise, continue to negotiate in good faith and
have set June 30, 2009 as the target date by which to enter
into a definitive agreement to establish a joint venture.
Semiconductor
Businesses
In the fiscal year ended March 31, 2008, Sony reviewed its
investment policy in the semiconductor business, deciding to
continue to focus on the growth area of CCDs and CMOS image
sensors while streamlining and downsizing the production
equipment and assets of system LSI for the Game business,
pursuant to its “asset light” strategy. As
a part of this strategy, in March 2008 Sony sold to Toshiba
Corporation (“Toshiba”) production equipment for
high-performance semiconductors such as the “Cell Broadband
EngineTM” processor and the “RSX” graphics engine
for
PLAYSTATION®3
(“PS3”), installed in the Nagasaki Technology Center
of Sony Semiconductor Kyushu Corporation. Nagasaki
Semiconductor Manufacturing Corporation, a joint venture, was
established by Toshiba, Sony Corporation and Sony Computer
Entertainment and commenced operations on April 1, 2008 to
produce such high-performance semiconductors with the production
equipment made available to the joint venture by
Toshiba. In addition, on March 31, 2008, upon
the expiration of their contract, Sony and Toshiba terminated
Oita TS Semiconductor Corporation, a manufacturing joint venture
located within Toshiba’s Oita
Operations. Following the termination of the joint
venture, Sony sold the related manufacturing equipment to
Toshiba on April 1, 2008.
Going forward, Sony intends to expand the “asset
light” strategy implemented in the Game-related system LSI
area described above to image sensors. One aspect of
this expansion will be to reduce investment expenditures by
outsourcing to third parties a portion of its planned increase
in manufacturing capacity for CMOS image sensors for use in
mobile phones.
This excerpt taken from the SNE 6-K filed Feb 20, 2009. Electronics
In the Electronics segment, where Sony has been most affected by the acute downturn in the economic climate, Sony has already undertaken certain short-term measures, including adjusting production, lowering inventory levels and reducing operational expenses. Going forward, Sony intends to adjust product pricing to mitigate the impact of the appreciation of the yen, curtail or delay part of its investment plans and downsize or withdraw from unprofitable or non-core businesses. Furthermore, Sony plans to realign domestic and overseas manufacturing sites, reallocate its workforce and reduce headcount.
Concrete plans include the following:
Realignment of manufacturing sites By advancing initiatives, including rationalizing its manufacturing operations, shifting and aggregating manufacturing to low-cost countries and utilizing the services of third-party original equipment and design manufacturers (OEMs and ODMs), Sony plans to reduce the total number of manufacturing sites by approximately 10 percent, from the current total of 57, by March 31, 2010.
Workforce reallocation and headcount reduction Through measures including the realignment of its manufacturing sites, a review of its development and design structure and the streamlining of its sales and administrative functions, Sony will implement a company-wide rationalization of its operations, including its headquarters functions. Sony intends to reallocate and optimize its workforce through programs including work reassignments and outplacements. As a result of these measures, by March 31, 2010, Sony plans to reduce worldwide headcount within the Electronics segment by approximately 8,000, out of approximately 160,000 as of September 30, 2008. At the same time, Sony plans to reduce the headcount of its seasonal and temporary workforce.
Measures being implemented in key product categories include the following:
LCD Television Business Manufacturing Operations
Design Operations
11
The following is our strategy for procuring panels, which is a pressing issue for improving profitability in the television business. Currently, Sony obtains its supply of amorphous TFT LCD panels from the 7th and 8th generation production lines at S-LCD Corporation (“S-LCD”), a joint venture with Samsung Electronics Co., Ltd. of Korea. The two lines have a production capacity of 130,000 substrates per month and 50,000 substrates per month, respectively. Furthermore, S-LCD is expected to start operations at its new 8th generation LCD panel production line during the second quarter of calendar year 2009, with an initial production capacity of 60,000 substrates per month.
In addition to S-LCD, in order to secure a stable supply of cost-competitive panels in the mid- to long-term, Sony signed a non-binding memorandum of intent with Sharp Corporation (“Sharp”) in February 2008 to establish a joint venture to manufacture amorphous TFT LCD panels and modules on a 10th generation production line. On January 29, 2009, faced with the changes in the world economy, Sony and Sharp amended and extended this non-binding memorandum of intent to confirm their mutual intent to postpone the targeted establishment of the joint venture until March 2010, approximately one year later than the originally scheduled date of April 2009. Sharp and Sony will, through continued discussion of how the two companies can best deploy their resources and expertise, continue to negotiate in good faith and have set June 30, 2009 as the target date by which to enter into a definitive agreement to establish a joint venture that will be mutually beneficial for both companies.
Semiconductor and Component Businesses
Semiconductor Business In the fiscal year ended March 31, 2008, Sony reviewed its investment policy in the semiconductor business, deciding to continue to focus on the growth area of CCD and CMOS image sensors while streamlining and downsizing the production equipment and assets of system LSI for the Game business, according to its “asset light” strategy. As a part of this strategy, in March 2008 Sony sold to Toshiba Corporation (“Toshiba”) production equipment for high-performance semiconductors such as the “Cell Broadband Engine™” processor and the “RSX” graphics engine for PlayStation 3 (“PS3”), installed in the Nagasaki Technology Center of Sony Semiconductor Kyushu Corporation. Nagasaki Semiconductor Manufacturing Corporation was established by Toshiba, Sony Corporation and Sony Computer Entertainment and commenced operations on April 1, 2008 to produce such high-performance semiconductors with the production equipment made available to the joint venture by Toshiba. In addition, on March 31, 2008, upon the expiration of their contract, Sony and Toshiba terminated Oita TS Semiconductor Corporation, a manufacturing joint venture located within Toshiba’s Oita Operations. Following the termination of the joint venture, Sony sold the related manufacturing equipment to Toshiba on April 1, 2008.
Going forward, Sony intends to expand the “asset light” strategy implemented in the Game-related system LSI area described above to image sensors. One aspect of this expansion will be to reduce investment expenditures by outsourcing to third parties a portion of its planned increase in manufacturing capacity for CMOS image sensors for use in mobile phones.
Component Business To strengthen its competitive position through unified development, design and manufacturing operations, Sony intends to move and consolidate its resources for small- and mid-sized LCD panel operations to Sony Mobile Display Corporation, and its battery operations to Sony Energy Device Corporation. 12
This excerpt taken from the SNE 20-F filed Jun 23, 2008. Electronics
Although the Electronics segment continues to hold a very strong
position in the worldwide consumer audio visual products market,
that position has become increasingly threatened as a result of
the entrance of new manufacturers and distributors. These new
entrants are threatening Sony’s position due to the
industry shift from analog to digital technology. In the analog
era, complicated functionality of electronics products was made
possible through the combination of several complex parts, and
Sony held a competitive advantage in the design and manufacture
of those parts as a result of its accumulated expertise. In the
digital era, however, complicated functionality has become
concentrated in semiconductors and other key digital devices.
Since these semiconductors and key devices can be mass produced,
they have become readily available to new market entrants, and
the functionality that once commanded a high premium has become
more affordable. This has led to intense price erosion in the
consumer audio visual products market. Also, Sony is exposed to
the pressure of declines in selling prices as a result of a
concentration of market share among a limited number of dealers
and retailers. To respond to these challenges, Sony is striving
to keep pace with price erosion by reducing its manufacturing
and other costs. It is seeking to maintain the premium pricing
it enjoys on many of its end-user products by adding
functionality to those products and developing new applications
and uses that appeal to the consumer. In addition, it is taking
steps to increase its competitive edge by developing high
value-added semiconductors and other key digital devices
in-house.
Sony considers improving the profitability of the television
business, which recorded a loss in the fiscal year ended
March 31, 2008, as the most pressing issue facing the
Electronics segment. As such during the fiscal year ended
March 31, 2008, Sony decided to exit the CRT television and
LCD rear-projection television businesses due to the shrinking
market for these products, and concentrate management resources
on the LCD television business. In order to improve
profitability in the LCD television business, Sony will continue
cost reduction plans through the standardization of panels and
chassis and the reduction in the number of components used in
production. In addition, Sony is targeting unit sales growth
exceeding that of the market by continuing to focus on
large-size and high value-added models, while at the same time
expanding the
line-up of
lower priced models and actively developing emerging markets.
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In anticipation of an increase in unit sales of LCD televisions,
Sony recognizes the importance of a stable supply of LCD panels.
S-LCD, Sony’s joint venture with Samsung, which is based in
South Korea, started its 7th generation amorphous TFT LCD
panel production line operation in April 2005 and has a current
production capacity of 120,000 substrates of mother glass per
month. S-LCD also started its 8th generation amorphous TFT
LCD panel production line operation in August 2007 and has a
current production capacity of 50,000 substrates per month.
Furthermore, S-LCD plans to construct a new 8th generation
LCD panel production line and start production during the second
quarter of calendar year 2009 with an initial production
capacity of 60,000 substrates per month. Also, Sony, together
with Sharp Corporation (“Sharp”), signed a non-binding
memorandum of intent in February 2008 to establish a joint
venture to manufacture amorphous TFT LCD panels and modules on a
10th generation production line. Sony and Sharp aim to
enter into legally binding joint venture documentation by
September 30, 2008. Production capacity is planned to be
72,000 substrates per month. Sony plans to receive a supply of
50 percent of the LCD panels produced by S-LCD and
34 percent of the LCD panels produced by the joint venture
with Sharp.
Sony has reviewed its investment policy in the semiconductor
business. In the future, Sony will carefully select investments
and adopt a strategy to more clearly focus on the CCDs and CMOS
image sensors and television- and video-related businesses. As
part of this strategy, in March 2008, Sony sold to Toshiba
Corporation (“Toshiba”) production equipment for
high-performance semiconductors such as the “Cell Broadband
Enginetm”
processor and the “RSX” graphics engine for PS3,
installed in the Nagasaki Technology Center of Sony
Semiconductor Kyushu Corporation. Nagasaki Semiconductor
Manufacturing Corporation was established by Toshiba, Sony and
Sony Computer Entertainment and commenced operations on
April 1, 2008 to produce such high-performance
semiconductors with the above-mentioned production equipment
made available to the joint venture by Toshiba. In addition, on
March 31, 2008, upon the expiration of their contract, Sony
and Toshiba terminated Oita TS Semiconductor Corporation, a
manufacturing joint venture located within Toshiba’s Oita
Operations. Following the termination of the joint venture, Sony
sold the related manufacturing equipment to Toshiba on
April 1, 2008.
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