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Sony Computer Entertainment Inc. has quietly started utilizing components produced using 65nm process technology inside its new PlayStation 3 40GB game console. In addition, some other components were changed, therefore, production cost of the new PS3 should be considerably lower than that of the prior versions of the game machine.

According to a report from c’t magazine, which was cited by ComputerBase web-site, SCEI installed 65nm versions of the Cell microprocessor as well as RSX graphics chip into the new version of PS3, which is incompatible with games developed for PlayStation 1 and 2. Additionally, Sony started to use a new I/O controller (CXD2984GB), a new mainboard revision (SEM-001), different XDR memory chips from Elpida as well as a new cooling system.

Since thinner production technology allows to make chips considerably less expensive to produce, then Sony is likely to cut production costs of its 40GB game console considerably from the previous 20GB, 60GB and 80GB models. According to estimates by analysts, Sony used to lose $241 and $306 on its $599 and $499 PlayStation 3 game consoles, respectively, when they were introduced in November, 2006.

While the bill of material (BOM) of the new 40GB game console is unclear, it is known that typically so-called die-shrinks in case of 90nm and 65nm process technologies reduce the manufacturing costs by about 33%.

According to analysts from iSuppli market tracker, the cost of the Cell chip was as high as $89 last year, making it the third most expensive component of PlayStation 3 game console. Nvidia RSX graphics chip cost Sony approximately $129 at launch. As a result of only process technology switch, SCEI will now be able to get the 65nm Cell for about $60, whereas the cost of the RSX will be about $86.

Considering that semiconductor companies usually optimize designs when they change fabrication process, actual savings of Sony may be considerably more than about $72 on the chips. Moreover, optimization of manufacturing, volume of scale savings, different components and other ways to reduce the cost might also result in considerable decreases of production costs. In fact, without installing chips made using more advanced process technologies into its Xbox 360 last year, Microsoft Corp. managed to reduce the BOM by as much as 38% thanks to optimizations of manufacturing operations.

Sony PlayStation 3 console is based on the Cell processor developed by IBM, Sony and Toshiba, the RSX graphics chip by Nvidia Corp., wireless network and Bluetooth connectivity and is equipped with Blu-ray optical disk drive. There are several versions of the consoles available around the world with 60GB or 80GB hard disk drives and variable compatibility with PlayStation 1/2 games as well as 40GB version that cannot play old games at all. The official price of Sony PlayStation 3 40GB and 80GB in the USA is $399 and $499, respectively.

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