Newer IBM Cell Processor to Enable Early PS3 Price Drop?

IBM announced Monday that it’s shrinking the size of the current PS3 cell processor by 25% to a 65-nanometer version. The company, together with Sony and Toshiba, has spent an estimated $400 million to design and develop the “supercomputer on a chip” that powers the PS3 (among other things) and costs a hefty $90/chip to make. So if declaring sunk costs won’t do the job, maybe a streamlined production process can enable an earlier than expected and a much needed price drop from Sony to stimulate PS3 sales.

IBM spokesperson Glen Brandow declined to predict how much the newer processor would cost in speaking with News Factor, though the smaller version will use less power and should theoretically cost less to manufacture. Calls to Sony by News Factor to see if the cheaper chip would affect the PS3’s current $500-600 price had yet to be returned. Granted, this is merely a possibility, but one that Sony would be foolish not to explore if and when considering an early price drop.

IBM plans to further reduce the size (and cost) of the Cell some time in 2008.

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