Last month, a report from a Japanese news publication claimed Sony will sell its chip making business to Toshiba. Specifically, the facilities used to manufacture the Cell Broadband Engine – the CPU powering every PlayStation 3 console – would be sold to Toshiba in a deal that would complete sometime in 2008.

The day following the initial report, both Toshiba and Sony publically denied such a deal. Sony’s been restructuring its chip business for months, but Sony spokesman Tomio Takizawa said “nothing concrete has been decided,” regarding its Cell Broadband Engine plant. Toshiba spokesman Keisuke Omori also said nothing has been decided on such a deal.

Today, just a month after the initial report, Toshiba and Sony announced intent to establish a joint venture that will produce high-performance semiconductors, which not only includes the Cell Broadband Engine but also the RSX graphics engine. The deal also includes the transfer to Toshiba from Sony Group the 300mm wafer line fabrication facilities installed in Fab 2 of Sony Semiconductor Kyushu Corporation's Nagasaki Technology Center (SKC) by the end of March 2008.

The new joint venture company, which has yet to be formally named, has a planned establishment date of April 1, 2008. Ownership of the joint venture will comprise of 60 percent Toshiba Corp., 20 percent Sony Corp., and 20 percent SCEI. Planned capitalization for the venture will be approximately 100 million yen ($857,000).

According to the joint statement, the facilities will continue to use the 300mm wafer line fabrication, with focus on 65nm process semiconductors. Toshiba and Sony Group will together target migration to 45nm process mass production, which will also logically extend to chips used in the SCEI’s game console. Current PlayStation 3 chips are built on the 90nm process.

Even with Toshiba’s majority control of the new company, the manufacturing plant will still serve regular orders for the production of chips used by Sony’s games machine. Toshiba says it will also use the facilities to expand and enhance its system LSI business.

The joint venture will move Sony back closer to its core business of consumer electronics, while Toshiba will gain another foothold on the semiconductor business. Toshiba recently announced a new chip called SpursEngine, which is based on the Cell architecture that is aimed primarily at graphics applications. The new facilities opened to Toshiba give the company greater flexibilities in its chip design and production, such as in the case of the SpursEngine.