Sony Group (NYSE: SONY) is preparing to sell its Israeli semiconductor subsidiary, Sony Semiconductor Israel, as part of a broader strategic realignment aimed at sharpening its focus on core entertainment businesses. The planned sale, confirmed by multiple sources to Reuters, is expected to value the unit at approximately $300 million.

Sony Semiconductor Israel, formerly Altair Semiconductor, was acquired by Sony in 2016 for $212 million. The company specializes in low-power cellular chipsets for connected devices such as smartwatches, wearables, and home IoT applications. The unit generates around $80 million in annual revenue and has recently undergone a wave of layoffs affecting over 100 employees, reportedly linked to ongoing business adjustments.

The divestment comes as Sony reevaluates its semiconductor strategy, shifting away from non-core chip businesses and doubling down on high-margin image sensor technology. In April 2024, Sony announced it was exploring external investment in its semiconductor division and considering a “fab-light” operational model to reduce capital expenditure and risk exposure. Selling the cellular chipset business aligns with this shift, signaling a clearer focus on imaging and entertainment technologies.

Entertainment has increasingly become Sony's growth engine. In 2023, more than 60% of Sony's total revenue came from its gaming, music, and film divisions. The company also plans to spin off its financial services unit later this year to streamline its structure and concentrate on its most profitable areas.

The proceeds from the chip unit sale are expected to support Sony's ¥250 billion share buyback initiative and its ¥1.8 trillion strategic investment fund, both designed to fuel further expansion in entertainment. However, analysts note that the chip unit still contributes roughly 16% of Sony's total revenue, and its divestment could increase exposure to the cyclical risks of content-driven businesses.

Investors will be watching closely to see if Sony can successfully close the deal, unlock value from the divestiture, and maintain momentum in high-growth sectors like gaming and streaming—markets projected to grow at a compound annual rate of 8–12% over the next five years.