Our basic understanding is that we probably won' t need to do everything by ourselves for next-generation chips."

Nakagawa also said that Sony plans to start producing 45nm chips " in late 2008 or early 2009" . At present, Cell chips use 90nm circuitry and producing begins on 65nm chips; change to 45nm would help to cut production costs. However, manufacturers would need to buy new machinery to make the smaller chips.

" We are going to study carefully whether we should carry out all the capital investment and produce [the 45nm chips] in-house," Nakagawa said.

Reducing the cost of the chips will be key to improving Sony' s financial figures - the company plans to raise its operating margin from 0.7 per cent to 5 per cent in the year beginning in April. Lower costs could also make it easier for the company to cut the price of the PlayStation 3, which will cost GBP 425 / EUR 599 when it launches in Europe next month.