Sony Drops the Most in Two Months as Chip Plant Remains Shut

  • Production at the camera-chip factory halted after earthquake
  • Tokai Tokyo cut its rating on Sony to neutral from outperform

Sony Corp. fell the most in more than two months on news that its camera-chip factory on the southern island of Kyushu remained offline following an earthquake last week that killed 42 people, damaged buildings and derailed a bullet train.

The shares fell 7 percent to close at 2,736 yen on Monday, the biggest decline since Feb. 9. Sony’s plant in Kumamoto remained idle as aftershocks continued, while operations restarted in facilities in Nagasaki and Oita, Sony spokesman Haruka Kitagawa said.

The Kumamoto plant, Sony’s main chip factory, typically operates 24 hours a day to make CMOS sensor chips, which turn light into digital signals -- a key component in digital cameras and smartphones such as Apple Inc.’s iPhone. The stoppage hit Sony’s chip business at a time when demand is slowing and a stronger yen makes it harder to sell products abroad. Tokai Tokyo Securities cut its rating on the company to neutral on Friday, citing the worsening business environment.

“As sales of high-end smartphones slow, the burden of advanced investments begins to weigh on Sony,” Masahiko Ishino, an analyst at Tokai Tokyo, wrote in a report. “It will take some time to improve profitability.”

Quake Aftershocks

Sony halted production and evacuated the factory following the quake, which struck four days ago. Aftershocks have also added to the death toll and damage to structures. In addition to the Kumamoto, Nagasaki and Oita plants, Sony also makes image sensors in facilities in Kagoshima and Yamagata, manufacturing 68,000 units a month, spokesman Tomio Takizawa said. He declined say when the operations will resume.

The shares of Renesas Electronics Corp., which makes chips for automotive uses, fell 12 percent after the company said equipment at its factory in Kumamoto suffered damage.

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