Sony and Toshiba announced today the establisment of a new company that will take over the development of the new "Cell" and "RSX" chips for the Playstation 3.

Sony announced that it plans to sell to Toshiba its "Cell" microprocessor output facility in Nagasaki prefecture and "RSX" graphic chip production line in Oita prefecture, both in western Japan, by March 2008.

The 300mm wafer line currently produces the Cell using a 65-nanometer process technology but under Toshiba's ownership will be transitioned to the advanced 45-nm process. Towards this effort, IBM and Sony have signed an agreement to extend their existing manufacturing relationship to 45-nanometer silicon-on-insulator (SOI) for high volume production of the Cell Broadband Engine (Cell/B.E.) processor.

"This collaboration will allow Toshiba to expand and enhance its system LSI business by increasing order volume and securing regular orders of high-performance semiconductors for PlayStation, while Sony Group will aim for the further growth of the PlayStation business by achieving process migration of high-performance semiconductors," the companies said in a joint statement.

The announcement confirms the recent reports about a possible JV between the two companies. Toshiba said that it will hold the 60% of the new company, while Sony wil have the 20% and SCEI the remaining 20%. The name of the new company has not yet been decided. Financial terms weren't disclosed.

Sony, which is in the final year of its three-year turnaround plan under Chief Executive Howard Stringer, said in February it will cut back on future chip spending and may not produce next-generation microchips using 45-nanometre circuitry in-house.