You'd think the silicon companies could make some rectangles...

Lmao!!!

 The first part essentially true, although the savings is far less than 50%. Chip prices depend on several processing steps, only one of which is waver costs. If you want 1M chips, you have to etch, bond, saw and test each chip on the waver until you reach your 1M goal. You need less wavers, but the rest of the costs stay the same.

The second part may or may not be correct. The Mainboard does not need to be changed as the Cell/RSX (or any chip in your PC) reside on chip carriers, so the chip/carrier interface will be different but not the carrier/mainboard interface.

I'd say you save around 30% in costs. The biggest cost saving factor in the industry has always been preordering product long before it is actually needed. 

google "czochralski" to find the answer to your question. It is the method applied here to produce raw crystals from which the wavers are sawn. 

 Because of the process they have to follow to obtain the silicon in pure state. Long story short, they take the silicon from the mines, make a couple of chemical reactions to remove the other metals present in smaller quantities, then the silicon is molten and extracted very slowly, starting with a crystal configuration patern and turning it around continually. They eventually get a perfect cilinder. Then they cut it with a diamond saw, making identical circular sections. 

...

 Yes, I study Electronical Engineering :P

As much as analysts and fanboys like to make comments like "Sony is losing $200 on every PS3!" no one's business strategy is that insane.

Sony picked the $600 initial price point because they knew they were going to get some massive manufacturing cost reductions immediately and they could afford to sell the PS3 at that price for 12 to 18 months (with most of it being at  a small loss or profit).

The area I think Sony potentially miscalculated is the rate at which they will be required to reduce the price of the PS3. Sony has (typically) reduced the price of their system on 18 to 24 month intervals and usually doesn't push large price reductions; as a guess I don't think they anticipated being at $300 until 2009.

HappySquirrel: Microsoft? Both consoles have launched with them losing money at their retail price points. Add in markup from channels and retail.

If only Dos was sold like that. But that only cost them 40K. (Bill Gates was smart and Savvy, if evil)

It's still probably more expensive to "rent" a 65nm fab, not that it doesn't pay out for big chips like the Cell.

I've personally never been all that convinced that the hardware losses were the primarly reason that Microsoft has been losing money on the XBox. Microsoft from day 1 has been spending more money that Sony and Nintendo on Marketing, exclusive games, and buying development studios; Microsoft's profitability was also hurt further because although they produced a similar number of games as Sony and Nintendo in the same time frame only a small fraction broke 1 Million units sold worldwide and a large portion of them were rumored to be unprofitable.

As a demonstration:

Name	Console	Publisher	Japan	America	Others	Total
	Halo 2	Microsoft	0.11	6.46	1.67	8.24
	Halo	Microsoft	0.10	4.91	1.42	6.43
	Fable	Microsoft	0.00	1.95	0.65	2.60
	Project Gotham Racing	Microsoft	0.05	1.40	0.69	2.14
	Project Gotham Racing 2	Microsoft	0.04	0.85	0.67	1.56
	Forza Motorsport	Microsoft	0.00	0.45	0.56	1.01
Totals (6 matches)	0.3	16.0	5.7	22.0

Number of Microsoft Game Studio games on the XBox: 65
Million Seller Percentage of game releases: ~10%

Name	Console	Publisher	Japan	America	Others	Total
	Mario Kart: Double Dash	Nintendo	0.89	3.85	1.86	6.60
	Super Smash Bros Melee	Nintendo	1.44	4.06	1.08	6.58
	Super Mario Sunshine	Nintendo	0.87	3.73	1.31	5.91
	The Legend of Zelda: Wind Waker	Nintendo	0.89	2.44	1.05	4.38
	Luigi Mansion	Nintendo	0.46	2.21	0.72	3.39
	Metroid Prime	Nintendo	0.12	1.92	0.73	2.77
	Pokemon Collosseum	Nintendo	0.71	1.17	0.62	2.50
	Animal Crossing	Nintendo	0.66	1.68	0.15	2.49
	Mario Party 4	Nintendo	0.92	1.13	0.39	2.44
	Mario Party 5	Nintendo	0.73	0.96	0.36	2.05
	Paper Mario 2	Nintendo	0.46	1.23	0.26	1.95
	Starfox Adventures	Nintendo	0.32	0.95	0.58	1.85
	Pikmin	Nintendo	0.56	0.78	0.27	1.61
	Mario Party 6	Nintendo	0.60	0.85	0.11	1.56
	Super Mario Strikers	Nintendo	0.21	0.91	0.42	1.54
	Kirbys Air Ride	Nintendo	0.45	0.96	0.12	1.53
	Mario Party 7	Nintendo	0.47	0.90	0.11	1.48
	Mario Golf: Toadstool Tour	Nintendo	0.25	1.03	0.15	1.43
	The Legend of Zelda: Twilight Princess	Nintendo	0.04	0.92	0.34	1.30
	Metroid Prime 2: Echoes	Nintendo	0.07	0.82	0.37	1.26
	Pokemon XD	Nintendo	0.35	0.58	0.21	1.14
	Mario Power Tennis	Nintendo	0.46	0.53	0.15	1.14
	Pokemon XD: Gale Of Darkness	Nintendo	0.52	0.59	0.00	1.11
	Donkey Konga	Nintendo	0.46	0.43	0.17	1.06
	Pikmin 2	Nintendo	0.56	0.35	0.14	1.05
Totals (25 matches)	13.5	35.0	11.7	60.1

Number of Nintendo published games on the Gamecube: 62
Million Seller Percentage of game releases: ~45%

The reason I brought Nintendo into this is becase I wanted to point out how low Microsoft's gaming income was by using sales on a system that sold worse than the original XBox. The Console industry has a ton of money sinks and Microsoft simply did not make enough money to cover their expenses and this (not hardware losses) is why they have lost so much money.