Behind the decision was the furious competition in entertainment from the likes of Google and Walt Disney. Sony, which seeks to be a ''creative entertainment company with a solid foundation of technology,'' is increasingly dependent on its market-leading image sensors. The semiconductor business, which includes the image sensors, accounts for 15% of the company's entire profits.

 

The fresh investment was made possible by a succession of moves to shrink down sectors and cut costs. It reported an all-time high group operating profit of about $8.2 billion last fiscal year, with solid results across much of its business portfolio, including games, music and flat-screen televisions coupled with semiconductors. Operating cash flow, except for financial services, topped $6.8 billion.

 

The investment also shows Sony's confidence in the future of image sensors. The Japanese company sees demand for the chips beyond smartphones to a variety of new connected devices as the superfast fifth-generation wireless technology takes center stage. But it was a tough decision. Sony's management has learned from experience that a downturn in demand, mostly with the outlook for smartphone demand uncertain, could leave it saddled with heavy costs without bringing the expected benefits from its investment.

 

The outlook for the sensor market, nevertheless, has been brightening. Some industry estimates show global demand extending 60% between 2018 and 2023. This owes partly to the trend of installing multiple cameras in smartphones, and partly to an anticipated rise in demand for ''internet of things'' applications, like self-driving vehicles and factory robots, once 5G fully gets off the ground.

 

Sony showed off the lowlight performance of its image sensors at the Tokyo Motor Show which kicked off here Thursday. Its booth featured a diorama in a dark room that made the details all but not visible to the naked eye. But when a staffer turned on a monitor above the display, viewers could clearly see the characters on the screen.

 

By touting the sensitivity of its sensors, Sony looks to appeal to automakers developing self-driving vehicles, for which cameras that can spot details even under poor lighting conditions are crucial. At the Ceatec electronics expo this month, which Sony returned to after a six-year hiatus, the company focused on the potential of the chips in medical devices. It showcased a surgical microscope system with 3D imaging capabilities.

 

Sony has such applications in mind as it operates on sensors incorporating artificial intelligence. Autonomous vehicles with AI-equipped cameras, for example, would be able to process data locally instead of having to upload it to the cloud, saving precious time if it detects an obstacle and needs to stop quickly.

 

AI sensors would open the door to a new business model for Sony's semiconductor business, with recurring revenue from data processing services on top of chip sales. Though the segment is profitable now, earning 143.9 billion yen in operating profit last fiscal year, it lost money as recently as fiscal 2016, and Sony aims a stable stream of recurring revenue to help ensure it stays in the black.

 

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