Sony cuts back on in-house Cell chip production

In order to improve profitability in its chip division and hit their target operating margin of 5 percent, Sony announced that it will cut back on future chip spending. This according to Reuters. The same report also suggests that the company may not continue in-house production of its Cell microchips.

According to Reuters, Sony Executive Deputy President Yutaka Nakagawa told reporters that investment in chips would come down significantly from the 460 billion yen ($3.8 billion) allocated over the three business years since April 2004.

The climbing cost of increasingly heavy initial investments as costs for chip-making equipment is one of the reasons for the company’s decision.

“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 specialize in chip production,” Nakagawa said.

Talking about Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp. – the world’s largest and second-largest contract chip makers – Nakagawa said, “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.”

Via Reuters

In order to improve profitability in its chip division and hit their target operating margin of 5 percent, Sony announced that it will cut back on future chip spending. This according to Reuters. The same report also suggests that the company may not continue in-house production of its Cell microchips.

According to Reuters, Sony Executive Deputy President Yutaka Nakagawa told reporters that investment in chips would come down significantly from the 460 billion yen ($3.8 billion) allocated over the three business years since April 2004.

The climbing cost of increasingly heavy initial investments as costs for chip-making equipment is one of the reasons for the company’s decision.

“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 specialize in chip production,” Nakagawa said.

Talking about Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics Corp. – the world’s largest and second-largest contract chip makers – Nakagawa said, “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.”

Via Reuters