PlayStation 3 Production Costs To Be Cut

Sony Shiroishi Semiconductor, a wholly-owned subsidiary of Sony Corporation, announced at the end of April that it would be expanding its production capacity of blue-violet laser diodes, a move which could significantly decrease the production costs of the PlayStation 3.

Blue-violet laser diodes are a key component of HD-DVD and Blu-ray systems. A tight supply situation has kept Sony's production costs much higher than that of Nintendo or Microsoft; according to estimates by research firm iSuppli, a PlayStation 3 system has a per-unit cost of over $840 but only retails for $599.

The increase in supply could cut Sony's production cost by up to $100 per unit, but whether this translates into lower retail prices remains in question: Sony could use the lower cost to help recover previous profit losses. However, earlier this year, Sony Senior Vice President Takao Yuhara said, "We may look at the price as part of our strategy to expand the market when the timing is right," indicating that Sony is aware that the PlayStation 3's high retail price is an impediment to the system's wider adoption.