Sony Is Planning To Halt Smartphone Production In China In A Bid To Cut Costs

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Sony has announced that it is ceasing smartphone operations in Beijing, China by shutting down a major plant in the far eastern country. The facility would apparently stop all activities in the next few days. A spokesman from the Japanese company has said that the step has been taken to cut costs and improve the profitability of the beleaguered smartphone business that hasn't turned a profit since quite some time.

However, that is not to say that the company has bid its smartphone ambitions goodbye, as it plans to shift manufacturing activities to Thailand to cut costs by as much as 50 percent. The Japanese giant hasn't mentioned how many employees would be laid off as a result of the closure. Apart from making smartphones in Thailand, the company also plans to outsource some manufacturing activities. Sony believes that this move would help it cut down operational costs and make the smartphone business profitable by 2020.

Sony's mobile division has been struggling since some time now. Despite repeated efforts, the company was unable to turn the tide and perhaps that's why such a drastic step has been taken. While other units of Sony mostly continue to do well, the smartphone leg has become something of a sore spot and made a loss of $863 million in the financial year that will end this month. Some industry watchers even believe that Sony should sell off its smartphone business as so far it has been unable to undercut Chinese rivals. The company's global market share is less than one percent and it only managed to sell 6.5 million handsets in the current financial year.

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Other companies, including Apple, are also struggling in China, given its macroeconomic conditions and the strong presence of local players such as Huawei and Xiaomi. Last year, Samsung also decided to shut down its factory in Tianjin because of fierce competition from local brands which caused its sales to decline in the country.

Sony's representative has also said that its latest decision has nothing to do with the worsening relations between the U.S. and China. The two countries have been engaged in tariff and sanction war since a while now.

Although Sony is kind of backing off right now, it has no intentions of quitting and says that its handsets will be a part of the 5G revolution. The company is betting on the next generation of wireless networks to return to profitability by 2020.

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The company is also reportedly planning to merge its mobile unit with the TV, audio, and camera wing and the new leg would allegedly be called "Electronics Products and Solutions." While this may help the company hide the specific stats for its mobile unit in the future, it will surely have to get a little more creative than this to make its smartphones profitable in the long run. For now, the company would most likely be focusing on image sensor research & development for Internet of Things (IoT) and self-driving cars. On the smartphone front, we can hope the company to go ahead with the release of the Xperia 1 and its successor but after that, it could take a while before the company launches a new phone.