Sony has announced that it will invest 200 billion yen ($1.6 billion) over the next three years in a production line for its next-generation semiconductors. A new single chip holding the PlayStation 2's capabilities has been announced as well.

　　With its 200 billion yen investment, Sony plans to create a plant for semiconductor chips with 65-nanometer process on 300mm wafers. This includes its all-purpose CELL chip, which is scheduled for use in the PlayStation 3 (though IBM says the chip may not be ready within the time frame for the launch of the PlayStation 3), as well as in other systems aimed toward broadband networking. These semiconductors will be used not only by Sony Computer Entertainment, but also throughout Sony's entire group of companies.

　　From the total investment, 73 billion yen ($605 million) will be invested within the year in building a new semiconductor line at Sony's Fab2 facility, which is located in Nagasaki, Japan. The production of the new line will start off with test products using the prototype CELL chips and will gradually go into mass production. Unlike the Emotion engine used in the PlayStation 2, the CELL chip will be an all-purpose product that will be used by more than just Sony Computer Entertainment. The CELL chip is likely to be sold to outside companies as well. "The introduction of advanced semiconductor technologies is imperative for the next-generation processors that support the broadband network era," said Ken Kutaragi, president and CEO of Sony Computer Entertainment and executive deputy president of Sony Corporation. "Together with the PC, home electronics and network products, such as games, movies, music, and digital broadcasting, which utilize broadband applications, will play a leading role in advancing microprocessor technologies. Sony Group aims to further develop and expand the market with its advanced semiconductor technologies and its rich and wide array of applications. This investment forms a strategic foundation towards our goal."

　　Kutaragi also said that that details on the PlayStation3 will be released in the next business strategy conference (date undecided), and that he may possibly be able to talk about other products which utilize the CELL microprocessor in a month.

　　The CELL chip has been under development by Sony, IBM, and Toshiba since the spring of 2001. Sony hopes to become the leading manufacturer for semiconductors using the 65-nanometer embedded DRAM process. The CELL chip is planned for release in 2005.

　　Sony has also announced that it will be merging the PlayStation 2's semiconductors into a single chip. The core of the PlayStation 2 currently consists of two chips: the CPU (Emotion engine) and the graphics processor (Graphics Synthesizer). The two chips will be combined into a single 86mm DRAM chip with 90-nanometer process, which will reduce production costs as well as the chip's electricity consumption. The PlayStation 2's new single chip will be produced in Toshiba's manufacturing plant, OTSS, in Oita, Japan, and later at Sony's plant in Nagasaki.

　　In related news, Toshiba is also scheduled to build a new production line in its OTSS plant, which will produce 300mm wafers with 65-nanometer process. The total cost of the plant will be 200 billion yen, and Toshiba will invest 40 billion yen this year. The plant, which will start production in late April of 2004, will manufacture chips for Sony Computer Entertainment and other companies. Sony is planned to invest in Toshiba's plant as well. Toshiba said that it hopes to switch the production line to build chips with 45-nanometer process in the future.