Sony Slashes PS5 Initial Production Due To SoC ‘Production Issues’

Tensions are running high at Sony as they are set to announce the price and release date of the PlayStation 5 on Wednesday. But while they are all set for its “digital showcase,” a hardware hiccup forced the company to cut down on the console’s initial production.

The Japanese consumer electronics giant had to slash its estimated production of the PS5 by 4 million units, down to 11 million, due to “production issues” from its custom-made system-on-chip (SoC). Sony bumped into a wall and saw production yields as low as 50% for its SoC, prompting them to slow down on the production of its next-generation console, sources familiar with the matter told Bloomberg.

The cut came at a time when Sony bolstered orders with suppliers “in anticipation of heightened demand for gaming” as the holiday season approaches. Preventive measures to stop the spread of COVID-19, such as social distancing and stay-at-home orders, were also pointed out as people “spend more time at home” and have turned to gaming for entertainment.

SoC production yields have been “gradually improving,” but they have yet to reach a stable level, Bloomberg’s sources added.

“If the news is accurate, we would view the reduction as negative,” Citigroup analysts told Bloomberg. They also said that what Sony is facing in their SoC yields would increase the component’s “cost and weigh or profit margins.”

IGN meanwhile relayed Niko Partners senior analyst Daniel Ahmad’s claim that production delays will “hit PS5 by 2021” and that Sony is planning to use Air Freight to meet the demands for the console this holiday season and “ship as many units as possible in the launch period.”

Production yield issues will always exist, especially at the beginning of a console launch, said Ahmad, but what Sony is dealing “seem more severe than expected.”

Sony’s untimely woes came in the wake of Microsoft revealing the price of the Xbox Series S at $299 and $499 for the Xbox Series X. Bloomberg reported analyst Masahiro Wakasugi’s prediction that the standard, disc-operated PS5 will be priced “as low as $449,” while the digital version of the console will play somewhere below $400.