Sony has announced a partnership with Infineon Technologies for future production of DRAM chips, which should have an impact on the semiconductor unit's fortunes.

The deal will take the form of a Tokyo-based joint venture and will work initially on chips for consumer electronics goods, such as cameras and mobile phones.

The move follows not long after rumours that Sony is planning to sell the production line for the PS3's Cell processor to Toshiba, and comes at a point at which the company is under increasing pressure to announce a price cut in Europe for the flagship console.

http://www.gamesindustry.biz/content_page.php?aid=29211

Finally, a business move that cuts production prices. Previously, sony has been pretty passive in doing what it can to cut production prices with technological upgrades that everybody else is doing (smaller die size for chips 65nm) , and just by making more, but this is really big news and could pave the way for another price cut soon.

So sony sells ps3 cell production to Toshiba, and then Toshiba sells the cell chips back to sony? Is this correct?

It was a plant that was sold, not the rights to make the chips or whatever. Sony's idea is to use someone else's plant that would be more efficient in making semiconductors cheaply, rather than its own plant doing this.  Sony just doesn't have the expertise, or experience to do a great job at this.  They've always been a hardware company, and probably purchased semiconductors from somebody else, not a semiconductor manufacturer.

They tried, they failed; it's time to move on.

We can only hope that the console market itself will not yield a similar lesson for Sony.

Oh ok, a doom and gloom post. Oh, yes, b/c sony is starting a joint venture with another company to reduce production costs, it *must* mean that they are dismantling the games portion of their company bit by bit.

It makes perfect sense now ho ho ho

 I'd say that this is probably because with PS3 sales so low, they have much more production capacity than they need and the upkeep on it is killing them.

 It's kind of interesting that Toshiba is one of their collaborators on the Cell processor and one of their chief rivals in the Bluray/HD-DVD war.  I'm not sure if Toshiba will be very generous to Sony in a deal like this.

The plant hasn't been sold yet and Toshiba has been involved in making the cell chip from day one. The cell processor is a collabaration of Sony, Toshiba and IBM. http://www-128.ibm.com/developerworks/power/library/pa-cellperf/

@Dallas

Sony also has an entire semi conductor division with enough expertise in it's field. http://products.sel.sony.com/semi/ The reason it's getting sold is to raise money for the Bravia lcd televisions, it's doing rather well but needs to lower the price more because of fierce competitionin that field.

Also, it's not being sold to raise funds for the PS3 like a lot of people suggest. Sony announced that they started saving for the initial loss years ago in one of their financial reports.