Sony ditches chip spending

Sony plans to cut back its spending on chip manufacturing, following a lurch into the red that was partly blamed on the development of its Cell processor. 

The company intends to rein in its production "significantly" over the next three years, following development problems with its PlayStation 3 games console.

Sony was ranked as the 13th largest chip producer in 2005, although three-fifths of its output was used in its own products.

The company told the Financial Times that it had "no intention of maintaining a pace of spending equivalent to that of dedicated chipmakers".

Sony has spent almost Y500bn (£2.13bn) since 2004, including Y200bn on the design of the Cell processor.

Yutaka Nakagawa, head of Sony's semiconductor operations, said that the company is "seriously considering" switching the production of its Cell chips to an outsourced operation.

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