Sony (SONY.US) plans to spin off its semiconductor division. The proposal from the former "thorn in the side" shareholder has finally become a reality.

According to informed sources, Sony is considering splitting its semiconductor business, marking another important step for the PlayStation manufacturer to streamline its business and focus on the entertainment industry. The sources said that the plan to split Sony Semiconductor Solutions Corp. could be launched as early as this year. One source indicated that Sony is considering distributing most of the chip business's equity to existing shareholders, while potentially retaining a minority stake after the split. One source pointed out that due to market volatility caused by US President Trump's tariff policy, the deliberations are still ongoing, and the final plan may be subject to change. On Monday, Sony's American Depositary Receipts (ADR) rose 1.24% to $25.28, reaching a new high since March 31. With a Japanese holiday on Tuesday, the Tokyo market was closed. In an email, representatives of Sony and the semiconductor business stated: "This report is based on market speculation, and the company has not yet made specific plans." The Japanese tech giant also plans to split its financial business, aligning with the value unlocking proposal made by billionaire investor Dan Loeb years ago. Sony had previously rejected reform demands from Loeb's Third Point fund, which sold off its Sony ADR holdings in 2020. Sony's semiconductor business provides leading image sensors to phone manufacturers like Apple Inc. Operating independently would give the business greater decision-making flexibility to respond quickly to market changes and broaden financing channels. In the last fiscal year, the business contributed approximately 1.7 trillion yen ($12 billion) in revenue, but it is unclear if Sony will fully divest from the business. In recent years, stagnant global smartphone demand has led to a slowdown in the business's growth, while US tariffs have added to industry challenges. Additionally, Sony's semiconductor business faces pressure from declining profit margins, rising costs, and competition from Chinese chip manufacturers. The operating profit margin of Sony's Imaging and Sensing Solutions division has steadily declined over the years, from around 25% to slightly over 10%. In contrast, Sony's gaming and music divisions have led profit growth in recent quarters, with operating profits increasing by 37% and 28% respectively in the quarter ending in December last year.