Sony to cut chip development spending

Sony is planning to cut spending on development of semiconductors over the next few years, the company said Monday

Sony is planning to cut spending on development of semiconductors over the next few years, the company said Monday.

The cut comes as Sony is reaching the end of a three-year restructuring plan through which it's been trying to reduce costs by YEN 200 billion (US$1.6 billion) through a variety of layoffs, plant closures and the ending of unprofitable businesses. The plan, which has the end of March 2008 as its target date, had succeeded in achieving savings of YEN 147 billion by the end of December 2006. Nine factories out of a total of 11 targeted for closure had been shut down and 10,500 people -- 500 more than targeted -- had left Sony's payroll.

The exact amount by which semiconductor research spending will fall has not yet been decided, said Tomiyo Takizawa, a spokesman for the company in Tokyo.

A report in the Tuesday evening edition of the Nihon Keizai Shimbun business daily said Sony will cut chip R&D spending by about YEN 200 billion. It will achieve this by outsourcing production of a future-generation version of the Cell microprocessor to another company, the newspaper said.

Sony's Takizawa said such a decision hasn't yet been made.

The Cell processor lies at the heart of the recently launched PlayStation 3 games console and Sony has plans to put it in a wide range of consumer electronics products. The current version is built on a 90-nanometer production process and Sony will shortly begin mass production of a second-generation model that is built on a 65-nanometer process. Each step in process technology results in a chip that is physically smaller and uses less power but the jumps also require invest in chip design and chip manufacturing technology.

By choosing to outsource production of the future 45-nanometer version of the chip, Sony will achieve the desired savings, the newspaper said.

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