Sony sells Cell factory to Toshiba

Stephen Withers
Friday, 19 October 2007 06:00

IT Industry - Deals

Toshiba will take over the chip production facilities currently used by Sony to produce key components for the PlayStation 3, including the Cell processor.

Although Toshiba will own the facilities, they will be operated by a joint venture formed by Toshiba, Sony and Sony Computer Entertainment. Toshiba will have a 60 percent stake in the business.

While Sony will be working with IBM on the development of a future Cell processor, part of the problem appears to be its unwillingness - or perhaps inability - to fund the investment needed to put such next-generation chips into production.

In particular, moving from 65nm to 45nm technology will require a substantial investment, though it will result in lower the production cost per chip.

The 100 billion yen (over $US850 million) deal could lead to increased demand for the Cell if Toshiba were to use it in its own products - the company recently demonstrated a Cell-based multimedia coprocessor - or succeeded in interesting other electronics companies in the chip.

The resulting economies of scale would help Sony reduce the cost of its game console, helping its competitive position against Nintendo's Wii and Microsoft's Xbox.