Sony 2003 Annual Report Download - page 126

Consolidated Financial Information 2003
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downsizing and withdrawal from selected businesses and the continued implementation of fixed cost reductions.
In addition, Sony will continue to strengthen its potential for growth, competitiveness, and earnings capacity in the
middle to long term through strategic alliances and other endeavors.
Recent Strategic Developments and Business Alliances
In an environment of rapidly advancing technology, Sony is engaging in alliances with other companies to quickly
and efficiently expand its business given limited resources.
Sony believes that its future growth is dependent upon the creation of a new market which combines the latest
content (including game, video and music) over an integrated platform that builds upon advanced devices in the
Electronics segment and leading-edge semiconductor technology adopted by the Game segment.
In the area of semiconductors and devices, in April 2003, Sony Computer Entertainment Inc. (“SCEI”) and Sony
Corporation announced that together they will invest a total of approximately 200 billion yen during the next three
fiscal years, beginning with the fiscal year ending March 31, 2004. This amount includes 73 billion yen to be invested
during the fiscal year ending March 31, 2004 for the installation of a semiconductor fabrication line to build chips with
65 nanometer line width on 300 mm wafers. With this investment, SCEI will be able to manufacture a new
microprocessor for the broadband era, as well as other system LSIs for the broadband era, which will be used in a
next generation computer entertainment system. This investment serves an important role in developing future
broadband network businesses, not only for SCEI, but also for Sony as a whole. Since the spring of 2001, SCEI has
been engaged, together with IBM Corporation and Toshiba Corporation, in the development of new microprocessors
for the broadband era. Since the spring of 2002, Sony Corporation has participated in this three-company alliance for
the development of advanced semiconductor process technologies. Research and development of digital signal
processing technologies for broadband applications are also underway. By means of this investment, SCEI and Sony
Corporation aim to effectively conduct test production and to quickly establish a mass production system with a 65
nanometer embedded DRAM process.
Regarding the convergence of Electronics and Game, in May 2003, Sony announced plans to sell PSX, the first
commercial product in which Electronics and Game converge. Combining DVD and hard disk drive recorders, PSX
will spawn a completely new product category. PSX will be based on the operating system and semiconductors used
in PlayStation 2, will have a television and broadcast satellite tuner inside, and will be compatible with PlayStation and
PlayStation 2 games. Recording and playback of television programs is just one of its many functions. Users can
also view still and moving images from digital still and video cameras as well as enjoy music CDs and video games.
The unit accepts a variety of home-use disc-based media as well as the Memory Stick, and it can be linked to an
Ethernet network. PSX is slated to go on sale in Japan late in 2003 and in Europe and the U.S. in 2004. Inside PSX
is technology from the Game and Electronics segments. PlayStation 2 technology includes the EmotionEngine and
Graphics Synthesizer semiconductors as well as PlayStation 2’s operating system. Our Electronics segment is the
source of the semiconductor laser, recordable DVD drive, codec (data compression and decompression) technology
and many other sophisticated technologies at the heart of PSX.