Chip shortage may threaten PlayStation 5 supplies at Christmas

To call Sony's PlayStation 5 "in demand" would be an understatement.
Enlarge / To call Sony’s PlayStation 5 “in demand” would be an understatement.

The global semiconductor shortage is threatening to constrain PlayStation 5 supplies throughout the rest of this year, even as Sony’s gaming chief insisted the company would be able to produce “decent numbers” of its new console in the second half of 2021.

The PS5 is one of the most sought-after tech products of recent months, with shipments selling out as soon as they reached stores when the console was launched in November last year.

Coronavirus lockdowns have only added to gamers’ demand for the latest consoles and software, fueling what are expected to be record profits for Sony’s gaming division in the financial year to March. Sony upgraded its gaming unit’s annual revenue forecasts earlier this month primarily thanks to improving sales of game software, services, and accessories.

But the broader surge in demand for electronic components, from the automotive industry to smartphones, over the past year has collided with pandemic-related disruption to semiconductor manufacturing. Analysts expect the chip industry will take many more months to recover.

Jim Ryan, president and chief executive of Sony Interactive Entertainment, said he expected the continuing PS5 supply limitations to “ease incrementally throughout 2021” but he refused to guarantee that there would be enough to meet demand by the next holiday sales season.

“It will get better every month throughout 2021,” he said. “The pace of the improvement in the supply chain will gather throughout the course of the year, so by the time we get to the second half of [2021], you’re going to be seeing really decent numbers indeed.”

But he added: “There are very few magic wands that can be waved.”

Ryan reiterated Sony’s “aspiration” to sell more PS5 consoles in 2021 than the 14.9 million unit sales of its predecessor, the PlayStation 4, in its first 12 months. Earlier this month, Sony said it had sold 4.5 million PS5s in November and December.

That compares with 26 million Nintendo Switch consoles sold in 2020, according to Ampere Analysis, which also estimates Microsoft sold about 2.8 million of its latest Xbox Series X/S in the final two months of last year.

“While far from weak, both Sony and Microsoft will rue their inability to produce more consoles to cater for strong demand,” said Piers Harding-Rolls, analyst at Ampere.

Ben Bajarin, analyst at Creative Strategies, forecasts that the semiconductor slowdown will linger into 2022. “For them to catch up, demand has to slow down,” he said. “I don’t see any end in sight.”

Ryan’s comments came as Sony revealed plans to launch a new virtual reality headset to connect to the PS5, after the previous PlayStation VR sold more than 5 million units.

Although Sony maintains that PSVR sales exceeded its expectations, virtual reality products have generally sold poorly, especially compared with the high hopes that followed Facebook’s $2 billion acquisition of Oculus VR in 2014.

More recently, there have been signs of renewed growth. Facebook reported “strong” sales of its latest headset, Oculus Quest 2, over the Christmas holidays. Apple is reported to be preparing a “mixed reality” device for a launch that could come as soon as next year.

Ryan provided few details on the new PlayStation headset’s specifications or launch date, other than to say it would be tethered with a single cable to the PS5 console.

“To really provide for a VR experience that PS5 owners will be happy with, that does require the system to be tethered,” he said, hinting at a “high-end” system with rich graphics.

That approach contrasts with Oculus, which now focuses on standalone, self-contained headsets, even if that means compromising on graphical fidelity. Oculus ended development of its PC-connected Rift product line last year.

“Obviously the technology has moved on since the first PlayStation VR headset, and we will capture that,” said Ryan.

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