Sony have unveiled plans that they hope will cut costs in the producution of their PS3 console by outsourcing the manufacture of the Cell chips.

Executive Yutaka Nakagawa spoke of how Sony has invested US$3.8 billion in the chips over the last 3 years, but that level of investment is set to fall now that there have been changes in the market.

Nakagawa told a press conference, "When we first offered the PS2, there were no semiconductor companies that were able to make chips for the machine, so we did it ourselves. But now, there are companies that specialise in chip production".

"They are aggressively investing in cutting-edge technology. Our basic understanding is that we probably won't need to do everything by ourselves for next-generation chips."

Nakagawa also claimed that Sony will begin to produce 45nm chips "in late 2008 or early 2009". At present, Cell chips use 90nm circuitry and production begins on 65nm chips. A change to 45nm would help to cut production costs. However, manufacturers would have to bring in new machinery to produce the smaller chips.

"We are going to study carefully whether we should carry out all the capital investment and produce the 45nm chips in-house", Nakagawa said.

Reducing the chip’s cost would be vital to improving Sony's financial figures, as the company hopes to raise its operating margin from 0.7% to 5% in the next financial year. Lower costs would hopefully lead to a drop in the PS3’s retail price.

>> Read - Sony Announces Realignment in Electronics Responsibilities to Strengthen Growth and Enhance Core Product Development
>> Link - Official Site/Sony