Please ensure Javascript is enabled for purposes of website accessibility

Global Chip Shortage Could Hurt PlayStation 5 Sales

By Keith Noonan - Feb 23, 2021 at 8:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The hit video game system is in danger of manufacturing snags.

Sony's (SONY 1.52%) PlayStation 5 console could be hard to find all the way through next Christmas season, according to a recent Financial Times report. Semiconductor companies across the globe are having a hard time meeting a surge in demand after volatility created by the coronavirus pandemic and geopolitical dynamics between the U.S., China, and other countries.

The red-hot PlayStation 5 launched in November and remains sold out at most retail outlets. Now, semiconductor manufacturing constraints mean Sony could wind up short on crucial components. Many eBay sales for the premium version of the PS5, which normally retails at $500, still frequently exceed the $900 mark. 

A PlayStation 5 console and controller.

Image source: Sony.

Sony Interactive Entertainment President Jim Ryan expects the supply constraint issues will ease in the second half of the year. However, he also highlighted the inherent difficulty in addressing challenges created by the semiconductor shortage. Unexpected difficulties in the chip market could have a more prolonged impact on PS5 manufacturing. 

Sony has pulled off an impressive turnaround over the last five years, with its performance largely driven by its PlayStation gaming division. Its latest console will play an important role in performance this year and beyond. 

Microsoft, Sony's chief rival in the space, could also encounter manufacturing issues with its recently launched next-gen Xbox consoles.

Shortages this year don't necessarily mean that Sony and Microsoft will sell significantly fewer consoles over the long term; the companies will meet pent-up demand before it completely dissipates. However, slower growth for each console's respective user bases could mean lost software and services revenue. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sony Corporation Stock Quote
Sony Corporation
SONY
$91.92 (1.52%) $1.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.