Sony has reportedly cut short the production of the new PS5 consoles after they experience problems in Soc yield. In a recent tweet from Daniel Ahmad, we find out that the company plans to reduce the number of units they plan to make. Users were already worried about how the tech giant will meet demand amongst the COVID crisis. Unfortunately, it looks like there are a few problems.
After the launch of Xbox, preorders users were waiting for Sony to drop the ball too. However, the company still hasn’t given any information on the preorder schedule yet. The only thing we have right now is a form on their website, which lets users sign up for a special preorder invite. From their past statements, we can assume that the preorder numbers will definitely be higher than PS4.
Coming back to the issue at hand, production yield is always lower at the start of a new generation. It takes time for the fabrication units to pick up certain practices that help increase the company margins with time. However, it looks like for Sony, the issues are rather severe this time.
The tweet cites an article in Japanese from Bloomberg, which states that Sony is trying to reduce its number of planned units for production. After the overwhelming response at the launch, the company initially had plans to make 15 million units by March 31, 2021. This number is now cut short to 11 million after the production problems they encountered. Take a look at the original tweet below.
Bloomberg reporting that Sony has had to cut PS5 production by 4m units due to production yield issues with SoC.
Original plan was to produce 15m units by March 31, 2021. Now only 11m units may be produced due to the yield issue.
— Daniel Ahmad (@ZhugeEX) September 15, 2020
In addition to production cuts. Sony is also using extreme methods to meet the demand, which they expect once the preorders open. The company is using air freight to get as many units shipped as possible right now. Since the production began in July this year. Sony has booked over 60 flights to send new consoles to retailers around the world.
The effects of lower production:
To evaluate the above decision, we need to look at a few things first. If we look at Sony’s initial plans, the planned production of PS5 was way above what they did for PS4. With the new decision, things will change a little bit, but the number is still a little higher than in the past. Now we could just say that it’s still okay and Sony will do just fine. But you can not be sure of the demand until the product launches.
Similarly, another big difference to take into account is the production numbers and retail numbers. A lot of online articles are trying to justify Sony’s decision by saying that in the past generation, they made even less. By April 2014, sony had sold about seven million PS4 units. This is a retail unit production figure. For Sony to reach this number, they would have to make about ten million units in production.
In response to the report of Sony’s revised production targets. Citigroup analysts, including Kota Ezawa, wrote that “If the news is accurate, we would view the reduction as negative”. According to the analysts. The lower yield will have adverse effects on Sony’s profit margins as they will increase component prices.
Also, this lowered production is still an estimate, and Sony might revise their strategy once the next fiscal year starts in March 2021. Till then, it looks like this is the situation. We advise you to sign up for preorders as soon as possible to reserve a better spot in the queue. Who knows when Sony hits the next roadblock in their supply plans.
That is about it for the latest news on the new console. Stay tuned for more updates on our website and be sure to let us know which PS5 model yo plan to preorder.