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Sony's PS3 Chips to Raise Toshiba's Profits

Toshiba has announced that its profit will rise at its system LSI unit, maker of the processor powering Sony Corp.'s PlayStation 3. Operating profit margins at the unit will rise to ten percent by as early as 2010, Masashi Muromachi, head of the Tokyo-based company's chip operations, said. The unit accounts for 41 percent of Toshiba's chip sales.

Toshiba cut development costs of system LSI chips, which combine multiple computing functions on a single piece of silicon, to bring the business to break even last fiscal year. The company is counting on demand for flat-panel TVs, game consoles and digital cameras to improve earnings at the unit and narrow the gap with Texas Instruments Inc.'s 21 percent margin last year.

"Focusing on raising profitability at the system LSI unit is a good strategy, because those chips are not likely to be commoditised,'' said Mitsushige Akino, who oversees USD 468 million in Japanese equities, excluding Toshiba, at Ichiyoshi Investment Management Co. in Tokyo. "Whether they can reach the 10 percent goal quickly is a whole, different issue."

Toshiba is developing the Cell chip for use in the PlayStation 3 video-game console. The Cell will be introduced to Toshiba's products in 2008, Muromachi said without elaborating.


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