Sony sells PS3 chipmakers to Toshiba

Company continues with its plans to lose unprofitable arms of its business.

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Sony has entered into an agreement with Toshiba to sell off its video game Cell processor chip production lines, reports Bloomberg.

The powerful Cell processor chips have cost Sony more than 200 billion yen (approx $1.7 billion) to develop, leading to losses in the division last fiscal year.

The deal with Toshiba--Japan's largest chipmaker--is believed to be part of Sony's strategy to cut back on loss-making businesses and grab funds for making more products, such as Bravia televisions and digital cameras.

Toshiba and Sony will enter into a venture to continue to make the chips, which are used inside the PlayStation 3 console, with a final agreement on the terms and specifics of this undertaking to be firmed up in March 2008.

Financial terms of the agreement were not disclosed, although the price of the planned sale is likely to be 100 billion yen ($861 million) believes the Nikkei newspaper.

Discussion

88 comments
faceman420
faceman420

@Colsworl - how will that effect the playability of ps2 games? will they run faster or look better?

lamprey263
lamprey263

@Colsworl - great, I'm glad someone finally helped make sense of this

Colsworl
Colsworl

People seem to be missing the big picture here. http://news.3yen.com/2007-10-19/the-other-shoe-falls-on-the-sonys-ps3-chip-sale/ Sony have sold this plant because it is outdated and is only capable of producing 65nm semiconductors. Sony will be moving production of the cell to an IBM plant in East Fishkill, New York who will begin manufacturing the "state of the art" 45nm semiconductor (ie: cell processor) These new cells will be a lot more energy efficient. So this is actually really good news for the ps3. We might see some 45nm cell equipped ps3's in the not too distant future.

Agermemnon
Agermemnon

What is going on there ? more than what is being reported on thats for sure .

jmate03
jmate03

@MasterChief725. Who is really benefitting here? HD-DVD.

MasterChief725
MasterChief725

wtf? I thought that Toshiba was Sony's biggest competitor! Who is really benefitting here?

Devvy01
Devvy01

Does this mean Toshiba will be making Laser TVs with built in PS3 technology?

bardkieran
bardkieran

Here's a M. Night Shyamalan twist concept for you: Toshiba takes over ownership and production of the cell, thus able to sell to anyone they please. In turn, Nintendo works out a deal with Toshiba and ATI/AMD, releasing Wii Too, their HD version of the Wii, which contains more processing and graphics power than the competition. Considering that Nintendo is doing so well, I wouldn't but it out of possible outcomes. ;)

kinetic100
kinetic100

There are so many factors to this its hard to say if its good or bad. Strange but Sony will get a large payout from its main competetor to blu ray. But then every PS3 sold will give even more funds to Toshiba. What a strange world we live in. Well i just hope some of the money goes towards funding some new PS3 devlopments.

vXnXP
vXnXP

snakepliskin35: ''your joking right?? PS3 games are made using Blu-ray discs'' SO WHAT??

seamusb
seamusb

If this eventually leads to more reduction in the PS3 price then why not.

MasterAsh42
MasterAsh42

Sony just sold stuff to their competitor in the format war. . .Keen.

snakepliskin35
snakepliskin35

thekey "It hasn't shown me any thing the 360 can't do. oh wait a minute it plays blu-ray movies. (What does that have to do with games?)' your joking right?? PS3 games are made using Blu-ray discs

thekey
thekey

wars45 "lol all the people nocking ps3 havent got one buy the dam thing then nock it . iv got a ps3 and i love it dont nock befor u buy ps3 is ace i love it" I brought t i love it, but.... It hasn't shown me any thing the 360 can't do. oh wait a minute it plays blu-ray movies. (What does that have to do with games?) But anyways this news isn't a big of a deal.

l3erserker
l3erserker

@ snakenamejoe Do you know the future of the PS3? Are you working with Sony? Does the news given by gamespot tell you that playstation done for? You tend to miss the fact that M$ is not the only rich corporation. Sony is a multi-billion dollar company and what they are doing is giving playstation owners what they want: a good console (which will take time no doubt, the best games are yet to come!) keep your fanboy crud in the system wars forum.

THE_PREZIDENT
THE_PREZIDENT

LOL at the people who are saying that Sony and Toshiba are rivals. Learn Business 101. Even though they are at a bitter level with their blu-ray and HD-DVD, it doesnt mean war. Money makes the world go round. Plus Sony DOES NOT own the Cell processor. They helped devolped it along with IBM and Toshiba

snakenamedjoe
snakenamedjoe

HA! If Sony is 'losing' its unprofitable divisions, I guess they will be selling off their entire game division soon. What did they lose, almost a billion dollars last year? I bet M$ would be a taker. So long Playstation.

Hitamaru-homia
Hitamaru-homia

They could jes get a team to copy the plans and make the Chip-Kicking toshiba out the door-,instead of Toshiba. But i dont know what agreement SCEA and Toshiba have over that chip...

godzillavskong
godzillavskong

I think we aren't even beginning to see the full power of the cell chip in the PS3. I think a lot of developers are quickly porting the 360 versions over, coding them to run on the PS3, and making more $.Once we start seeing the BIG AAA titles developed by SCEA, truly utilizing the PS3, then we will start to see the PS3 fly off the shelves. I currently own a 360 but would love to get a PS3 but I'm just waiting for their exclusive games.Not a fanboy, just a gamer. Heck, I even own a Atari Jaguar.

Game-o_O
Game-o_O

The 65nm costs $100's less to make. Will they eventually use it for the PS3? Any how, at least Sony is making money a lot faster this way. Toshiba will no doubt get all the future grosses from it. Sony will profit from the PS3 its self, just Toshiba will handle the Cell now. Like nVidia handles the RSX. You don't see Toshiba buying Intel (cough* Microsoft) lines to make tvs :p. "Sony loosing million".. yeah and making billions? It doesn't have 'JUST' a gaming section. Also, it sells the PS2+PSP still. I guess those are non-profitable now? Lol, anyways. Currently the PS3 costs 127$ less to make, even more with the features took out of the 40gig. (The EE *ps2 chip* is 27$ more if you count that as well) They'll also be combining the blue-tooth/WiFi into a single chip with a smaller bridge?? (Saving more) AND 65nm the RSX (unknown). The smaller Cell (if manufactured for the PS3) saves up to $40. (note: blu-ray is $100 less thanks to the doids) $167 + unknown rsx & blue-tooth/wifi combination blah blah saving quite a bit. Except a nice price cut in Q2.

Neo1O1
Neo1O1

This will ease Sony's burden. Good for them.

clawboy
clawboy

It's about time these two titans joined sides.

FirstAlchemist1
FirstAlchemist1

whatever makes sony more money Bill Gates is rich enough

felshs
felshs

that is not good. Its gonna be hard for sony to drop PS3 price after that because toshiba will charge higher price to turn it to profite.

fauljosh
fauljosh

If they want to sell unprofitable areas of their company why don't they sell off the gaming division. They're bleeding money like a cut carotid artery.

not-e-n-e
not-e-n-e

I agree with wars45 completely, (although they did spell knock wrong). i love my ps3, dont knock it before ya try it

wars45
wars45

lol all the people nocking ps3 havent got one buy the dam thing then nock it . iv got a ps3 and i love it dont nock befor u buy ps3 is ace i love it

carljohnson3456
carljohnson3456

@metc123: Well, to say "hehe" at Sony losing "millions upon millions" sounds like a Sony hater to me. Dont be ashamed, everyone is a Sony hater who doesnt own a PS3.

metc123
metc123

no way, i have a psx, ps2 jus think the ps3 has nothing to offer that microsoft-nintendo cant.. maybe ill be proven wrong i donno

carljohnson3456
carljohnson3456

"metc123 As Sony Despretly tries to make some money back on the investment that has put sony under financial pressure costing them millions apon millions in the hope that come 2009 it will start repaying them!!! Hehe......" Havent you already posted twice in here already? Pure Sony hater arent ya?

cheezlarson
cheezlarson

This is a move that is hard to tell if it is good or bad. It gives Sony money that they spent making the chips and will let them get future chips for cheaper, but on the other hand they give Toshiba (probably their biggest competitor in consumer electronics) great technology to make all of their stuff better.

Razzi65
Razzi65

emmmmmmmmmmmmmm.... not so good news for me.. as fan boy

metc123
metc123

As Sony Despretly tries to make some money back on the investment that has put sony under financial pressure costing them millions apon millions in the hope that come 2009 it will start repaying them!!! Hehe......

chewygun
chewygun

imagine toshiba decides to stop producing the cell - thats bad news

Homerj
Homerj

@drunkenmoron Your reasoning is a bit off there. Sony is losing money from its cell chip production factory, because the chips cost more to make than what they are receiving back in sales. When Toshiba buys that facility, they, as a profit-making company, will have to increase the revenues from cell chips to make up for those high production costs. How do you think they will do that? By charging Sony a whole lot more for the finished product. This is not a long term strategy for bringing the PS3 into profitability (all the SKU changes and price drops in the world wont sell a gaming console that has no desirable games), this is a short term strategy for bringing in a big amount of liquid funds.

ZOnikJJ
ZOnikJJ

I guess that's a good move....

Azhar85
Azhar85

good strategy sony...

lamprey263
lamprey263

I want to know how Toshiba plans to profit off of this if Sony couldn't. I'm more willing to believe Sony needs this for revenue than any other reason.

drunkenmoron
drunkenmoron

Lot of people don't seem to understand the situation. Sony sold it's manufacturing plant to Toshiba because it was unprofitable. The reason why it unprofitable is because it hard to run microprocessor producing factory for a profit. This is because you need to keep these factory super super clean. If one piece of dust, that is 1um big, fell into a chip the chip would be ruin ( I could go farther by explaining why this would happen but I don't feel like explaining how transistors and gates are used in processors). This also causes the number of chips that are produced that don't work to be pretty high. I could also talk about what companies do to make a profit by producing chips but again I don't feel like explaining. So I'm just going to say this, sony is losing money by producing chip. So they are having toshiba make the chip for them so that sony will save money for each chip they make and also get money from selling the factory.

jakob_187
jakob_187

Can I just point out and say that I called this one happening about two years ago? There, I said it.

Zerosumgame
Zerosumgame

[This message was deleted at the request of the original poster]

Dark_Scion
Dark_Scion

Sony hasn't given up their share of the Cell CPU. if any of you...and i only spot like maybe 3 at most know anything about the R&D of the PS3 you'd know it wasn't just a sony venture. it was a Toshiba, IBM and Sony Venture. Yes the Cell was going to be used in the PS3. more or less as a test grounds for it. but before the PS3 was released. Toshiba, Sony and IBM said they would use the Cell in Laptops in the near future. There will be no Toshiba system. Toshiba isn't producing PS3s either so there will be no HD-DVD PS3. the only thing this is doing for Toshiba and Sony is, Sony can now sell PS3s for cheaper. Toshiba gets a little bigger cut of the PS3 profit then they did before sense they are now physically making a component for the PS3.

RADEON2
RADEON2

PlanoPunisher doint take this the wrong way but...PS3 with HD-DVD!? then HOW THE !#$% WOULD YOU THEN GO ABOUT PLAYING A PS 3 GAME AND MOVIE BLU-RAY!?

ShadoweaverCode
ShadoweaverCode

While your cutting your losses Sony, might as well give up on the PS3. It's sure not making the video game industry any better. It's just getting 360 ports and crappy exclusives from the last-string development teams at the dev studios. Sony's first party games mostly suck with the exception of God of War, but I can easily live without that game. Blu-Ray isn't taking off like it was supposed to, everybody is fine with DVD's. So yea, there's really no reason for the PS3 Sony just wants your money.

IGDetail
IGDetail

Some companies are better equipped to mass produce and others, like Sony, are better at coming up with new products. Why wouldn't they get rid of a manufacturing arm? That's why they lock away the best minds in their "laboratories".