It'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.