Market news: CIS market predictions, Sony Q1-2023 results

In recent Medium blog posts Ming-Chi Kuo offers some predictions for CIS market in 3Q23 and beyond.

I. Industry background and current situation:
 The wide camera CIS of the two iPhone 15 standard models will be upgraded to 48MP and adopt a new stacked CIS design. Due to the low yield rate, Sony has increased the CIS production capacity for Apple by 100–120% to meet Apple’s demand, resulting in a significant reduction in high-end CIS supply for Android.
 The global CIS wafer reconstruction (RW) key supplier Tong Hsing’s earnings call pointed out that the bottom of the CIS industry is 3Q23.
 China’s semiconductor industry policy continues to implement the domestic replacement strategy, which is the main reason why Tong Hsing is conservative in its future mobile phone CIS RW business (orders continue to be lost to Chinese competitors).
 The current inventory in the CIS supply chain has improved to a normal level (10–14 weeks) from 30–40 weeks in 1H23.
 AI visualization applications will be the other key to driving CIS growth in the long term. The most visible application at this stage is self-driving cars, and the next most likely is robotics.

II. Will Semi will benefit from a significant market share gain of high-end CIS in the next few years:
 As Sony has reduced the supply of high-end Android CIS, brand vendors need to actively seek alternative solutions, benefiting Will Semi’s high-end CIS (64MP+) order growth (since 2H23). Will Semi’s high-end CIS market share is expected to increase significantly from 3–5% in 2023 to 10–15% and 20–25% in 2024 and 2025, respectively, which is conducive to long-term revenue and profit growth.
 The current inventory level of Will Semi has improved to a normal level (about 12 weeks).

III. The high-end CIS cooperation between Smartsens and Chinese brands will become closer:
Given that more and more of Sony’s capacity and R&D resources will continue to be consumed by Apple, Chinese brands such as Huawei will actively partner with more CIS suppliers, and in addition to Will Semi, Smartsens is a potential key supplier worthy of attention.

----------------

1. Following two 2H23 iPhone 15 standard models, two 2H24 iPhone 16 Pro models will also adopt stacked-designed CIS, so Sony’s high-end CIS capacity will continue to be tight in 2024, benefinting Will Semi to continue to obtain more orders for high-end CIS from Chinese smartphone brands (design- in & design-win).

2. Will Semi’s CIS shipments declined YoY in 1H23 due to inventory corrections, but due to inventory restocking and market share gains, the company will bottom out ahead of smartphone (end device) and resume growth from 2H23. Will Semi CIS shipments will improve significantly in 2023, growing by about 8% YoY (vs. a decline of about 40% YoY in 2022), which is better than smartphones and most components.

3. As Sony’s high-end CIS capacity remains tight, Will Semi’s high-end CIS (48MP+) market share will continue to grow rapidly. It is expected that 2H23 high-end CIS shipments will increase by about 50% HoH to 36 million units, and shipments in 3Q23 and 4Q23 will be about 16 million and 20 million units, respectively. Benefiting from the significant increase in orders in 2H23, Will Semi’s high-end CIS shipments in 2023 will grow by about 35% YoY.

4. Among Will Semi’s high-end CIS, the main contributions come from OV50A, OV50E, OV50H and OV64B. The above mentioned CIS replaced many orders from Sony.
Looking forward to 2024, thanks to the tight capacity of Sony’s high-end CIS, Will Semi’s total CIS and high-end CIS shipments are expected to grow by about 15–20% YoY and 40–50% YoY, respectively. With the continued improvement in total shipments and product mix, sales and profit are expected to grow significantly from 2H23.

----------------

In other market news, Sony reported a 41% drop in operating income for the image sensor business. 

https://www.sony.com/en/SonyInfo/IR/library/presen/er/pdf/23q1_sonypre.pdf