Sony, Toshiba to Partner on Cell Processor

High-def rivals Sony and Toshiba are forming a joint venture to make Cell processors and other high performance chips.

Electronics giants Sony and Toshiba have announced (Japanese) have announced they will form a joint partnership—60 percent owned by Toshiba—that will take over manufacture of the Cell processor and graphics processing unit used in Sony’s PlayStation 3 game console, and possibly other high-performance chips. The deal will also have Sony selling Toshiba two of its chip fabrication plants, on in Nagasaki and another in Oita, essentially taking Sony out of the semiconductor business as an integrated device manufacturer.

The companies are reportedly still working out details, but reports from Reuters and other sources put the price for the chip fabrication facilities around $900 million, The partnership is currently slated to begin operations on April 1, 2008.

Sony has been considering getting out of the semiconductor business for several years, and entering into the partnership with Toshiba now not only helps the company defray the gargantuan costs of bringing new chip manufacturing processes online, but also potentially expands the market for products like the Cell processor, which Toshiba and Sony have both said they’re looking to integrate into additional consumer electronic products. The sale will also improve Sony’s bottom line, which has been hurting in part due to the manufacturing and production costs associated with its Blu-ray high-definition disc players and unexpectedly weak sales of the PlayStation 3 console. Sony CEO Howard Stringer has been aggressively slashing what he views as non-core elements of the company in an effort to return the giant company to profitability.

In the arena of so-called next-generation high-definition discs, Sony and Toshiba are rivals in an increasingly bitter format war, with Sony advocating its own Blu-ray technology and Toshiba heading up the HD DVD camp.