Sony’s PlayStation 3 console could soon get a significant price cut. That’s because IBM has just announced that it will soon start mass-producing a new, cheaper and more efficient generation of the PS3's Cell processor.

The Cell currently works on IBM’s 65nm SOI (silicon on insulator) process, which requires a lot of power and is fairly expensive to produce.

But the new much-mooted 45nm high-k Cell processor will be 34 per cent smaller and use 40 per cent less power. The benefits of these advancements extend beyond the obvious, too.

Energy efficient

The 45nm processors have the same number of transistors on a smaller die, which means the yield per batch will be higher - they’ll be able to make more processors per wafer of silicon. This means production costs should come down significantly, and these price cuts will ultimately be passed on to the consumer, although no one knows exactly when.

The fact that the new parts will consume 40 per cent less power also means that it will run a lot cooler. As a result, new raw materials for cooling components such as heatsinks and fans will be reduced, causing further price reductions. Not forgetting that this comes hot on the heels of Sony's already having halved the PS3's production costs since launch.

It was no secret that the enormous (£425) price of the PS3 when it first arrived was down to the fact that it cost Sony so much to produce. It was so pricey, in fact, that it’s only recently that Sony has managed to start making a profit on every console it sells.

With all the losses its been making, Sony’s gaming arm will desperately want to post a profit at some point. So it goes without saying that the price cuts won’t be arriving imminently.

But one thing is for sure - the PS3 will soon cost no more than the Xbox 360. It might even be cheaper. And it’s at that point that the HD console war might tip in Sony’s favour.