DRAM price hikes loom, but Sony’s profits still jump 22%, full-year guidance raised.

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Despite facing pressure from surging memory chip costs, Sony Group achieved strong profit growth and raised its full-year performance forecast, thanks to favorable exchange rates and a diversified business portfolio. However, its core games hardware business is confronting supply chain cost challenges.

The Japanese tech and entertainment giant announced on Thursday that operating profit for the December quarter jumped 22% year-on-year to 515 billion yen, beating market expectations of 468.9 billion yen. Revenue was 3.71 trillion yen (about $23.68 billion), slightly above the expected 3.69 trillion yen, up 1% year-on-year. This marks a robust rebound after Sony experienced a year-on-year profit decline last quarter.

Sony subsequently raised its full-year operating profit forecast to 1.54 trillion yen, an increase of 110 billion yen from its previous projection, an 8% upward revision. The company also raised its annual revenue forecast by 300 billion yen to 12.3 trillion yen, a 3% increase, but maintained its estimate of losses due to U.S. tariffs at 50 billion yen.

After the earnings release, Sony's share price initially rose more than 5%, but then reversed to fall by 0.87%. The company’s largest revenue source, its gaming business, performed weakly, while market research firm TrendForce predicted on Monday that contract prices for traditional DRAM chips would 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 slow

Sony’s games and network services division posted sales of 1.613 trillion yen this quarter, down 68.7 billion yen year-on-year. This division includes the popular PlayStation home console brand and is Sony’s largest revenue driver.

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

DRAM price surge poses cost risk

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

According to a report released Monday by market research firm TrendForce, contract prices for traditional DRAM chips are expected to rise 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.

Strong performance in the music and imaging segments has partly offset pressure in the gaming business. Sony’s music business posted a 12.6% year-on-year increase in revenue for the December quarter, driven by growth in live events, merchandise sales, and streaming services.

Meanwhile, revenue for the imaging and sensing solutions business grew more than 20%. This division focuses on the development and manufacturing of semiconductor-based imaging and sensing technologies.

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