Profit Drop At Sony Leads To Cuts In Semiconductor Investments

Sony blames Playstation 3 launching costs for profit loss; cutting semiconductor investments by "large amount."

TOKYO (AP) – Sony Corp. plans to cut capital expenditures at its semiconductor operations by a ''large amount,'' a company executive said Tuesday, weeks after the electronics giant reported a drop in profits for the latest quarter.

The Tokyo-based company's capital expenditures in its semiconductor business will be much less than the $3.79 billion it spent over the last three fiscal years, said Executive Deputy President Yutaka Nakagawa, who heads the company's semiconductor and component device business.

Last month, Sony blamed the launching costs of its PlayStation 3 game console for much of the 5 percent drop in group net profit for the last three months of 2006 to $1.32 billion.

The company has been engaged in a massive turnaround effort since 2005, when Howard Stringer took the chief executive job. Sony has dropped unprofitable businesses, sold off assets, cut jobs and closed plants.

Nakagawa also said that production of 45nm Cell processors – the main chip used in the PlayStation 3 –would probably begin at the end of fiscal year 2008 or the beginning of fiscal year 2009.

Sony had yet to decide whether the 45nm chips will be manufactured by Sony itself or in cooperation with another company, he said. The processor is currently made using 90nm technology, and Nakagawa said the chips will soon be made with 60nm technology.

In the future, the company's semiconductor operations would focus mainly on imaging devices, which are used in products such as digital cameras, game components and many consumer electronic goods, he said.

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