DRAM price hikes put pressure, Sony's profits still increase by 22%, upward revision of full-year guidance

Despite facing rising costs for memory chips, Sony Group has achieved strong profit growth driven by favorable exchange rates and a diversified business portfolio, and has upgraded its full-year performance outlook. However, its core gaming hardware business is currently facing supply chain cost challenges.

The Japanese tech and entertainment giant announced on Thursday that its December quarter operating profit surged 22% year-over-year to 515 billion yen, surpassing market expectations of 468.9 billion yen. Revenue reached 3.71 trillion yen (approximately $23.68 billion), slightly above the expected 3.69 trillion yen, representing a 1% year-over-year increase. This marks a strong rebound after a decline in profit in the previous quarter.

Sony subsequently raised its full-year operating profit forecast to 1.54 trillion yen, an increase of 110 billion yen from its previous estimate, an 8% upward revision. The company also lifted its annual revenue forecast by 300 billion yen to 12.3 trillion yen, a 3% increase, while maintaining an estimated loss of 50 billion yen due to U.S. tariff impacts.

Following the earnings release, Sony’s stock price initially rose over 5%, but then reversed to a decline of 0.87%. The company’s largest revenue-generating gaming business showed weakness, while market research firm TrendForce predicted on Monday that contract prices for traditional DRAM chips will soar 90% to 95% this quarter compared to the previous three months, raising cost concerns for PlayStation console manufacturing.

Gaming Business Under Pressure, Hardware Sales Slowdown

Sony’s Game & Network Services segment posted sales of 1.613 trillion yen this quarter, down 68.7 billion yen year-over-year. This segment includes the popular PlayStation home gaming console brand and is Sony’s largest revenue driver.

Although this business has benefited in recent quarters from the shift to digital game purchases and growth in PlayStation Plus subscriptions, hardware shipment growth remains sluggish. Sony’s hardware division is expected to face headwinds from rising component costs this year.

Rising DRAM Prices Pose Cost Risks

PlayStation consoles rely on dynamic random-access memory (DRAM) chips, which are currently in tight supply due to surging demand from AI and data center operators.

According to a report released Monday by market research firm TrendForce, contract prices for traditional DRAM chips are expected to increase 90% to 95% this quarter compared to the previous three months. Last month, a top semiconductor industry CEO told CNBC that memory chip shortages are expected to persist until 2027.

The strong performance of Sony’s music and imaging segments has partially offset the pressure on its gaming business. Sony Music’s revenue for the December quarter grew 12.6% year-over-year, driven by live events, merchandise sales, and streaming services.

Meanwhile, revenue from the Imaging & Sensing Solutions segment increased over 20%. This division focuses on developing and manufacturing semiconductor-based imaging and sensing technologies.

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