Sony Will Take Back Manufacturing of Cell Chips From Toshiba

Sony will take full control of the manufacturing of the processor used in its PlayStation 3 console, ending a two-year joint venture with Toshiba, the companies announced Friday.

Jointly developed by Sony, Toshiba and IBM, the Cell Broadband Engine processor contains a PowerPC core for general processing and eight specialized vector processors well-suited to the repetitive, parallel calculations necessary for 3D modelling and graphics in games. While the Cell has found other applications in HDTV upscaling, in modelling and supercomputing, it is used primarily in Sony's PlayStation 3.

Sony and Toshiba set up their processor joint venture, Nagasaki Semiconductor Manufacturing (NSM), in March 2008 to manufacture the Cell chip, a related graphics engine called RSX, and some system-on-chip (SoC) products that the two companies use in their consumer electronics products.

When they announced their plans for NSM in 2007, the companies said the venture would allow them to move production of the Cell processor to a more modern manufacturing technology, reducing the size and, importantly, the cost of the chips. At the time, Sony was losing money on every PlayStation 3 it sold, hoping to recover those losses from profits on game sales. The company's manufacturing cost reduction strategy finally paid off in the first quarter of this year, though, when it began to make a profit on console sales.

Toshiba currently holds a 60 percent stake in NSM, with the remainder split equally between Sony and its subsidiary Sony Computer Entertainment. Sony now plans to take control of the manufacturing equipment for the Cell, and later to end the joint venture. While the transfer agreement is non-binding for now, the companies hope to sign a definitive agreement by the end of March, and to complete the deal shortly thereafter.

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