Sony in talks to sell Cell facilities to Toshiba, according to report

By Colleen Taylor, Contributing Editor -- Electronic News, 9/17/2007

Tech industry giant Sony Corp. is reportedly considering a sale of some of its gaming chip production facilities to Toshiba Corp., according to a Nikkei report that cites "sources close to the matter."

According to Nikkei, a Japanese business news daily, Sony plans to sell its Cell production equipment and facilities to Toshiba for about $869.6 million (100 billion Japanese yen) in a deal that will close this upcoming spring. Both Sony and Toshiba are headquartered in Japan.

The production facilities that are said to be a part of the deal make the Cell microchips that are used in Sony's PlayStation 3 gaming console, which debuted in the U.S. in November 2006. Sony's gaming division has been a source of major financial headaches for the company in the past year, as the PS3 console fought a losing battle  for market share with rival Nintendo's less expensive Wii gaming system, which also debuted in November 2006. In May, Sony posted a $1.9 billion (232.3 billion Japanese yen) annual loss in its game division; one month later, the company cut 100 jobs at its PlayStation headquarters in Foster City, Calif.

The deal is reportedly not an indication that Sony is planning to pull out of the gaming business. Sony and Toshiba are also in talks to set up a joint venture so that Sony can continue to have easy access to the gaming chips after the sale is made, the report said.

Sony and Toshiba could not be reached by Electronic News for immediate comment on the report.