CellieIt's no secret that the Cell chip, currently bloated by 90- and 65-nanometer circuitry, is driving up the cost of PlayStation 3. Sony hopes to improve the chip's profitability by moving to 45-nanometer circuitry, in turn, driving down per-chip production costs. Commercial production of the 45-nanometer Cell is expected to begin by early 2009, which could indicate that a significant PS3 price drop (or perhaps, a slimmer model to compliment the even tinier new chip) would follow later in the year -- assuming that Blu-ray drive costs would have also dropped by then.

Of course, the equipment needed to manufacture the 45-nanometer chips would require a steep initial investment, suggesting that Sony may cease in-house production of the Cell and outsource the process to companies that specialize in chip-making. Expect Sony to be making calls to Taiwan Semiconductor Manufacturing Co. Ltd. and United Microelectronics, the world's two largest contract chip makers, any day now.

This article was originally published on Joystiq.

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