Analysts: Sony's backing off 32nm chip research a smart move

If Sony is pulling out of plans to do 32-nanometer chip research, it's a smart move for a company plagued by financial troubles and it won't affect the industry's march toward smaller microprocessors, analysts say.

Reuters news service reported that Sony is withdrawing from joint research with IBM and Toshiba to develop the manufacturing technology for producing microchips with circuitry of 32 nanometers (nm) or less. The Tokyo-based entertainment and electronics company declined to comment on the report.

The news comes the week before Intel is scheduled to announce that its 45nm Penryn chip family is shipping. Late last month, Intel opened its new US$3 billion manufacturing facility in Arizona, kicking off mass production of its new 45-nanometer microprocessors.

Jim McGregor, an analyst with In-Stat, said now that 45nm technology is in production, 32nm microprocessors should only be two years away.

That two-year research commitment might have been too much for Sony, though.

Charles King, an analyst at Pund-IT, said he suspects Sony is simply directing the money it would have spent on this research directly to its bottom line.

"Sony has had some problems the last few years," King said. "It had disappointing sales of the PlayStation 3 game station. And the music business continues to take hits, and those are hits that affect Sony ... The move toward 32nm is a process that a lot of companies are talking about, but the commitment of resources to get there will be considerable. It may be that Sony has decided it's better off putting those resources elsewhere."

This isn't the first whiff of Sony pulling back some of its resources in this area.

Just weeks ago, the company announced that it was selling its manufacturing facilities for its popular cell chip to Toshiba. The cell chip is used in Sony's PS3 but also is finding a second life in blade servers and even supercomputers.

"It makes more sense financially for them to outsource," said Dean Freeman, an analyst at Gartner. "The chips Sony has made go into their end products. There aren't too many of those dinosaurs left... The cell is important to Playstation technology but they only had 10,000 to 15,000 wafer starts per month at their fab. That's pretty small. Why carry that asset when you're trying to sell a Playstation?"

Freeman also noted that if the reports are accurate, Sony hasn't pulled out of the design phase of 32nm research. The company is still working on the initial design with IBM and Toshiba, but has simply bowed out of contributing to the manufacturing process.

"They're going fab light," Freeman added. "Really, the key is the design. If you have the design, you have the best part. That's your intellectual property."

McGregor said he doesn't see any slowdown in the research that is building toward 32nm production. Too many other companies, like Intel, IBM, Toshiba and Samsung, already are working on it. "It's coming on strong," he added. "Intel has already started talking about it. The march toward next-generation processors seems to be on track for the next few years."