Rumors abound this week, likely to have some foundation in reality, that Sony may sell off its Cell manufacturing plant in Japan, to partner and rival Toshiba for $860 million.
We’re not sure where the figure came from, Sony spent around $1.6 billion in the creation of the Cell chip and its related manufacturing capability and in one check spent $1.1 billion in 2004, $340 million on licensing fees and manufacturing commitment at the IBM East Fishkill plant, and the rest on converting and expanding plants over to the Cell architecture.
We have heard rumors that all the Cell chips that are being shipped in its PS3 are still coming from the East Fishkill plant, and that its own plant is either surplus to demand, or more likely has such low yields that it would be better off in the hands of a better chip company than itself, in order to ensure a smooth flow of parts.
So far the Cell chip, built around an IBM Power core and up to 8 MIMD parallel processing slave chips, and capable of being tightly integrated in twos and loosely integrated in far higher numbers, which come complete with huge amounts of onboard bus bandwidth, is most famous for its inclusion in the PS3 gaming console. While that device has shipped perhaps 50% of the number Sony was looking for, other computer oriented projects have emerged from the device ‘ one of the largest supercomputers in the world has been built using it, and medical and imaging workstations are now coming out, it has been promised in HDTVs, and the device is starting to see its first forays into driving real time video encoders.
What the Cell needs are higher yields, and more uses to drive down manufacturing costs, and help Sony drive down the costs of the PS3, and if that means handing over the keys to the factory to Toshiba, we’re sure Sony would not hesitate. But does it?
Toshiba is the company that has defied Sony over the next generation High Definition recording format, putting up its HD DVD design against Sony’s Blu-ray. Today the HD DVD was first to market, and is now offered in triple layered 50 GB chunks, like the Blu-ray, and is undermining both the PS3 and halting Blu-ray inches from total domination of the HD formats.
Would you sell the basis for your pride and joy, must win product, to a company hell bent on the destruction of your ‘other’ pride and joy must win product?
Well that would depend, we think, on whether or not Toshiba might be given a convenient incentive to climbdown and drop the HD format, and that incentive might just be giving it the manufacturing base behind the PS3.
And what’s to stop Toshiba, which also contributed to the design of the Cell, offering it to other gaming console makers ‘ those that compete head on with the PS3, although that could be a condition of such a deal. Dropping supply of HD DVD players to Microsoft might also be part and parcel of such a plan.
Toshiba’s original role in the Cell was to design and build support chips which Sony described at the time ‘as various media processors to be used for a wide array of consumer electronics,’ which included an investment by Toshiba of $292 million and the building of CMOS DRAM in 65 nanometer geometry.
Sony had never previously built its own semiconductors apart from flash memory and LCD displays, so the Cell chip represented a radical departure for the company, and despite its hand being firmly held by IBM, it perhaps is now seeing it as a mistake.