Sony talks about 45nm Cell production for late 2008, considers outsourcing

Wednesday 14th February 2007, 12:12:00 PM, written by Farid

Talking yesterday to reporters, Yutaka Nakagawa, Executive Deputy President of Sony's semiconductor and component device businesses, revealed their ambition to reduce significantly the company’s semiconductor related expenses. He didn’t predict any specific number, but stressed the costs related to Sony's semiconductor operations would be much lower than the Y460 billion ($3.8 billion) spent the past three financial years.

During his chat with the press, Nakagawa reported that Sony plans to start commercial production of the Cell Broadband Engine chip, which powers the PlayStation 3, on a 45nm node by the first half of 2009.

Also worthy of note, Nakagawa indicated that Sony may consider outsourcing the production of the Cell chips to third party chip foundries in lieu of continuing production in-house. Potential third party partners would include companies already well known to regular Beyond3D readers, such as TSMC, UMC and Chartered Semiconductor.

Currently Cell chips are produced in-house at Sony's Nagasaki (JP) plant and at IBM's East Fishkill (US) facilities; tho it is unclear if IBM's facilities produce Cell chips destined for PlayStation 3 production, or if these IBM chips only find their way into other Cell-powered products.

The decision to opt for outsourcing chip production may mark a paradigm change in Sony's approach to semiconductor production. Until recently the company produced in-house all the major chips in their consoles, a solution which allowed Sony to control more closely their production channel and its associated costs. Nakagawa explained that outsourcing was never an option for PlayStation 2 chip production because “there were no semiconductor companies that were able to make chips for the machine”. He indicates that aggressive investments made by the third party foundries to keep their facilities at the cutting edge process-wise would now allow Sony to think about outsourcing as an option.

Another latent explanation for this change of stance with regard to outsourcing may be that Sony is probably also facing a decreasing returns-to-scale situation due to the massive costs required in order to keep high-end semiconductor production lines competitive. In such a scenario, having recourse to an exterior chip manufacturer may prove to be a more profitable solution for Sony.

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