OmniVision Burned In Apple's iPhone 5 Deal With Sony

Sony CEO Howard Stringer's slip that that Sony is manufacturing camera sensors for Apple's upcoming iPhone 5 has not gone over well with stockholders of OmniVision, the company that built the cameras in previous iPhones.

Shares of Santa Clara, Calif.-based OmniVision's stock dropped this morning 9 percent to $32.93, reflecting fears that Apple's move to Sony will cut OmniVision's profits.

Rumors of a deal between Apple and Sony appeared as early as February, with many analysts concerned that OmniVision would not be able to manufacture enough 8-megapixel cameras in time for the launch of the iPhone 5. The reason for the delay, they said, lay in issues over the Back Side Illumination chip powering OmniVision's cameras. While more efficient, few analysts expected OmniVision to be able to ship the chip in volume quickly enough. Apple may have felt the same way prior to its move to Sony.

But Raymond James Analyst Hans Mosesmann downplays the significance of Apple's move, speculating that the move to Sony won't be completely at OmniVision's expense.

Our view since the beginning of the year is that Apple will split the CMOS sensor business in 2011 between Sony and OmniVision, he said. Mosesmann noted that for Apple, splitting camera production between OmniVision and Sony would be a business move.

The Sony CEO commentary finally lets the genie out of the bottle and actually places OmniVision in a more favorable light net/net in our opinion, he said. Mosesmann's conclusion, however, seems tenuous given that OmniVision's role in iPhone 5 camera manufacturing will be split with Sony.