Terushi Shimizu

Executive Vice PresidentSony Corporation

Representative Director and PresidentSony Semiconductor Solutions Corporation

Representative Director and PresidentSony Semiconductor Manufacturing Corporation

Semiconductors Segment

Sony Corporation

Semiconductors Segment

1. Business Environment

2. Long-Term Business Strategy

Sony Corporation

Semiconductors Segment

1. Business Environment

Sony Corporation

Worldwide Image Sensor Shipments (Revenue Basis)

※Source: Sony

Mobile Area• Market expansion from multiple lens and large sized sensors

• Steady adoption of sensing products although the pace of market growth is slower than expected

AV Area• No change in expansion of high-end sensor market

New Area• Automotive: No change in the speed of growth of the ADAS market

• Factory Automation：Growth market in the mid to long term

• Security：Stagnant market from late FY18 to early FY19. Expect recovery in FY19

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

New AreaMobile SensingMobile Multiple Lens (Sub Camera)

AVMobile Front + Rear

Semiconductors Segment

CY 19E 20E 21E 22E 23E 24E 25E

Sony Corporation

Mobile Market Growth: Smartphone Units x Multiple Lens x Larger Size

Increase inSensor Units

and Number of Wafers

Semiconductors Segment

Smartphone Multiple Lens Adoption Rate

Smartphone Sensor Optical Size

Approximately20%*

Average AnnualIncrease in Sensor

Size

Approximately15%*

Average AnnualIncrease in MultipleLens Adoption

※Source: Sony’s Forecast

AlarmSound

Toyota Corolla Sports vehicle with Sony’s sensorwas awarded the top score in the automatic braking tests for

night-time pedestrians (1st half of FY18)

Brake!

Sony Corporation

Automotive Initiatives Semiconductors Segment

Initiatives for the futureSensor fusion

• Achieve quality and functionality for automotive - high sensitivity, high resolution,and capable of reducing LED flicker while maintaining high dynamic range

Camera

Milliwaveradar

Sensor Fusion

• Able to integrate large amounts of raw data from camera images, LiDAR and milliwave radar

• Identify objects even in harsh conditions

LiDAR

Recent initiativesAutomotive image sensor space

IMX224（1.27M pixels）

IMX324（7.42M pixels）

Current Model

IMX490

Sony Corporation

Automotive Initiatives: Sensor Fusion Semiconductors Segment

Scene 1: Fog Scene 2: Backlight Scene 3: Night & Rain

• Identify car ahead despite fog making it difficult to see

• Identify car ahead despite glare making it difficult to see

• Identify car ahead despiteheadlights and rain making itdifficult to see

Current Technology

Sony’s Sensor Fusion

Sony Corporation

Image Sensor Revenue Share Target

51%*FY25Target

60%

FY18

※Source: Sony

Semiconductors Segment

Sony

Sony

Sony Corporation

Revenue Portfolio Target

SensingSeveral%

FY25Target

Sensing30%

FY18

Semiconductors Segment

Sony Corporation

Image Sensor CAPEX

FY12-14 FY15-17 FY18-20E FY21E-23E

Semiconductors Segment

Approx.700 billion yen

Sony Corporation

ROIC Target / Roadmap to Improvement Semiconductors Segment

×

＝

ROIC Actual15%

Target20%-25%

MarginHigher functionality,higher value added

productsOperational improvement

Decrease in depreciation and R&D

FY18 FY25FY21

InvestedCapital

Turnover Rate

CAPEX increase due to higher demand

Improvement in turnover rate due to decrease in CAPEX investment

Sony Corporation

2. Long-Term Business Strategy

Semiconductors Segment

Sony Corporation

Long-Term Business Strategy

FY19-21 Beyond FY21

Market for mobile-use image sensors grows Mobile 3D sensing penetration expands

Sensor market growth stabilizesUse case diversifies

Combine edge AI processingwith sensor hardware

Pursue a recurring revenue business model

Aggressively invest to maintain No.1 position in imaging and

take No.1 position in sensing

Market Environment

Pursue partner strategy inthe software space

Generate cash flowExpand the business through new use cases in sensing

HWStrategy

SWStrategy

*HW: hardware, SW: software

Semiconductors Segment

Sony Corporation

Sony Sensors Used in Various Applications Around the WorldSemiconductors Segment

Sony Corporation

Cloud and Edge AI Processing

Benefit:• Big data processing ispossible

• Less influence from edge device performance

Benefit:• Ensure privacy• Reduces data transfer time• Reduces cloud usage costs• Reduces bandwidth

Edge AI Processing

Processing

Cloud AI ProcessingProcessing

Semiconductors Segment

Sony Corporation

Image Sensors × AI Possibilities

Imaging AI Sensing AI

Better Picture QualityPossibilities limited to

the number of human eyes

Recognition andMachine VisionUnlimited Possibilities

Eliminates moireCorrection beyondphysical limitations

Utilizes complementary colorsHigh sensitivity and color

reproduction

Moire

Semiconductors Segment

Sony Corporation

Role of Image Sensors in the AI Era

What Image Sensors AimTo Do Going Forward

Create clean image data based on how AI sees the world

What Image Sensors AimedTo Do Up Until TodayCreate clean images based on how human eyes see the world

Semiconductors Segment

Sony Corporation

Integration of Edge AI Processing and Sensor Hardware

Approximately 51%* global market share Superb expertise in data output space

Integrate edge AI processing and sensor hardware Pursue a recurring revenue business model

Semiconductors Segment

Sony Image Sensors AI Applications

※Revenue basis, Source: Sony

Sony Corporation

Increase Image Sensor Possibilities with Stacked Structure

AI Recognition

PixelsPixels

LogicEmbed

Semiconductors Segment

Sony Corporation

Growth in Image Sensor BusinessSensingEdge AI

Semiconductors Segment

Sony Corporation

Achievements

Increase in sales and OI in image sensors for mobile-use due to the shift to multiple lenses and larger sized sensors

Adoption of Sony’s ToF sensors for mobile applications

Increased presence in the automotive market

Adaptability to market volatility for factory automation and security cameras

Operating Income Analysis（bln yen）

Issues

OperatingIncome

879.3Sales 850.0Image Sensors

711.4Image Sensors

649.3

1USD=110.9 yen 110.9 yen

One-Time Factors*

Depreciation / R&D

Inventory Change

Exchange Rate

Unit increase/Product Mix Improvement/Cost

Reduction

Semiconductors SegmentFY2018 Review

164.0

143.9

* Please refer to slide 24 of Presentation Material for FY2018 Earnings.

Sony Corporation

Environment

Acceleration in multiple lens and larger sized sensor adoption

Sensor market for factory automation and security are expected to recover from the second half of FY19, after a slowdown in the second half of FY18

990879.3

Operating Income Analysis（bln yen）

Basic Strategy

Invest to meet the growing demand for sensors

Accelerate initiatives to generate monetization opportunities that go beyond selling sensor hardware

Image sensors840

Image sensors711.4

（April Forecast）

Semiconductors SegmentFY2019 Forecast

Sales

143.9 145

Depreciation / R&D

Inventory Change

Exchange Rate

Unit increase/Product Mix Improvement/Cost

Reduction

1USD=110.9 yen 110 yen

OperatingIncome

Sony Corporation