I was reading this yesterday. Here's some more details:

http://www.asahi.com/english/Herald-asahi/TKY200709170055.html

Sounds like the cell is a bust for Sony outside of the PS3, which as we all know, isn't meeting expectations either. So they're selling it off to recoup loses (getting back half of the development cost).

While I'm not expert, I expect buying chips from the new Sony/Toshiba subsidary would be no cheaper, if not more than what they're paying for it now, as the new management will have to be profitable and not running at a loss. So I don't see how this will help a $399 PS3 come about.

This is also interesting as it suggests an admission by Sony that the PS3 was a step in the wrong direction, and as they are effectively getting out of the chip making business, the PS4 will likely not strive to be a super-computer console like the PS3 did. That's good, as the PS1 & 2 were not powerful systems, and they sold fantastically. I never understood why they felt they had to outdo Microsoft in the power department.

Found this tidbit on Reuters:

Sony, which is in the final year of its three-year turnaround plan under Chief Executive Howard Stringer, said in February it will cut back on future chip spending and may not produce next-generation microchips using 45-nanometre circuitry in-house.

http://www.reuters.com/article/technologyNews/idUST10757920070915

1.7 billion X_X.

Dodece, that's a fair analysis. Sony IS in trouble, but them actively working to fix taht isn't a bad thing. Them getting rid of assets that are a drain to the company is a GOOD thing. That plant is not making them money, and is almost certainly costing them money.

If this is an omen at all it's a good one. Why? Because an omen is something telling of the future. At present Sony is in trouble. You can't have an omen forcasting what'd already going on around you. But if they recouperate a large chunk of their investment into the Cell and save themselves a large expense at the same time that is good for them even if the current situation is still bad.

Gamerace, while it would seem like it shouldn't be cheaper, we can't even say that for sure. The fact is, Sony can't shoulder the cost of retooling their factory. If Toshiba can retool it for less, they can make the chips for less than Sony would have. And if their production cost is lower they may be able to sell it low enough that cost difference is in Sony's favor. It certainly will be in the short-term, and could be in the long term. And if it's not, there's still the fact that they couldn't really afford the retooling anyway.

In the end, this is a necessary action in order to keep costs reasonable in the present and near future. Yes, it is by no means a step towards a $400 PS3, but anyone expectign them to hit that price range this year was a bit too hopeful to begin with. As far as them not producing 45nm chips in-house, well, that's a no brainer...

damage control is not a good sign no matter how you spin it. Yea it's something they had to do, and it helps them but it shows you the kind of situation that they've put themself in.
It's like saying that over the next 5 years Sony makes 1 billion on the PS3 and ignoring that fact that they lost 3 billion before that.

four steps back, one step forward.

I would think that the smarter thing to do would be to outsource the manufacture of the cell to one of the larger fabs in taiwan that have VERY low cost structures. Sell this fab to Toshiba outright and retain the right to manufacture there or wherever they want to. They could easily cut costs outsourcing to a large fab that builds on 300MM wafers and has 45 and 65nm capabilities...

I don't think they can do this since Sony does not own the design outright.

This isn't a move to decrease production costs -- this is a move to liquidate.   Sony has been selling a lot of assets lately.

Looks like their Financial IPO was overpriced and they have to slash the price.

http://www.forbes.com/feeds/ap/2007/09/18/ap4129226.html