Sony Reduces PS5 Production by 4 Million Units

Sony won’t be making as many PlayStation 5 units as anticipated, thanks to production troubles. According to a Bloomberg Japan article by Takashi Mochizuki and cited by industry analyst Daniel Ahmad, Sony has revised its PS5 production estimates for the current fiscal year (ending in March 2021) down to 11 million units, a drop of 4 million from the previous target of 15 million. (The English version of the story is available here.)

The PS5 production drop is attributed to issues arising from the new console’s SoC (System-on-Chip) that resulted in lower-than-expected yields. Lower yields at the SoC level means that the rate of production for new PlayStation 5 consoles slows down, as the SoC is essentially the “heart” of the device. Production yield issues are common when it comes to new devices and tech, as manufacturers test out new machinery, refine their processes, and adapt to conditions on the ground. Later, as processes are improved, yields go up and production costs drop. Oftentimes, device makers will use the opportunity to issue updated hardware containing the fruit of the improvements.

Ahmad was quick to put the new development in perspective, noting that in July 2020, when PS5 production started, the rate was initially much higher than the PS4’s at the same point in its lifespan. The yield issues merely brought down the rate to closer to the PS4’s level. Therefore, while the volumes of PS5 consoles available at launch and the first few months after are unlikely to be affected, the issues may constrain supply further into 2021.

Here's the best way to think of the above.

PS5 first six month production initially much higher than PS4.

Now due to yield issues PS5 production is slightly higher than PS4.

So there will still be more supply than PS4 launch, but the real question is how high is demand?

— Daniel Ahmad (@ZhugeEX) September 15, 2020

This isn’t the first time Sony has shifted its PS5 production targets in 2020. In April, Sony expected to limit its output to just 5 or 6 million units for the first year. Then it revised the target upward in July, to meet the boost in demand brought on by the global COVID-19 pandemic.

As Ahmad mentions, the big question at this point is less about Sony’s ability to produce PS5s but the public’s desire for the new console when it becomes available. That demand may hinge on the system’s ultimate price and release date, which might be broadcast at the PS5 Showcase event on September 16, 2020.