Sony Forks Over Chip Production To Toshiba :can do a better job of supplying the brains for the PlayStation 3.

Sony and Toshiba are collabrating for chip development :

Sony announced on Thursday a plan to sell its loss-making multimedia microprocessor operations to Toshiba for an undisclosed amount, hoping that its trusted joint venture partner can do a better job of supplying the brains for the PlayStation 3.

Following a month of leaks to various media outlets by unnamed sources, the world's second-largest consumer electronics company made an announcement late on Thursday that it will unload production lines for its Cell processor in a joint venture arrangement for a reported amount of about 100 billion yen ($856.38 million) to Toshiba.

The sale, drawn up in preliminary form as a nonbinding memorandum of understanding, is the latest swing of the ax by Sony Chief Executive Howard Stringer, who has cut the workforce and closed factories to boost profitability. In February he promised to cut back on development costs for the expensive, loss-making chips and to consider outsourcing production to outside partners.

Toshiba appears to be the best available buyer: Along with IBM (nyse: IBM - news - people ), Toshiba helped Sony develop the Cell, which bundles multimedia game features onto a single chip using 65-nanometer technology. Cell is produced in a plant in Nagasaki, in southwestern Japan; costly investment would be needed to prepare it to produce chips using next-generation 45-nanometer technology.

In addition to the sale of the Cell line, Toshiba is also taking over the manufacturing equipment for a line of image-processing chips also used in the PlayStation 3. Both sides were mum on how much the sale was worth but Nikkei Business Daily reported before the announcement that the sale price was about 30 billion yen ($256.92 million).

In a joint announcement, the two companies said Sony would transfer to Toshiba its advanced 300-millimeter wafer line fabrication facilities installed in a plant operated by its subsidiary, Sony Semiconductor Kyushu Corp., by the end of March 2008. The facilities house the Nagasaki Technology Center, responsible for developing the Cell line.

While the ownership of the asset would go to Toshiba, Sony and its gaming unit, Sony Computer Entertainment, would jointly participate in the production process as a minority shareholder of 40% in a new joint venture to be set up in April with Toshiba, which would take the remaining 60%.

Sony (nyse: SNE - news - people ) shares swooned after initial press rumors of the sale a month ago, but on Thursday afternoon, they were up 30 yen, or 0.55%, at 5,430 yen ($46.57).

The sale allows Sony to pass on the heavy cost of microprocessor development to Toshiba, Japan's largest microchip maker. It could possibly lower Sony's procurement costs for Cell chips if Toshiba can reap production efficiencies from commercializing the chips in a broader range of applications. Sony will also be able to invest the proceeds of the sale to bolster its world-leading position in image-processing chips for its digital cameras and cell phones.

For Toshiba (other-otc: TOSBF - news - people ), buying the Cell line would give it a huge upgrade in the system chip business, where it is lagging far behind Intel (nasdaq: INTC - news - people ) and Samsung (other-otc: SSNLF - news - people ), with the anchor of having Sony as a reliable buyer.

Both companies said they would jointly advance the Cell chips to the next stage of technology: Toshiba was reported by Nikkei Business Daily as intending to roll out a 45-nanometer version of the Cell in two years and employinh the cutting-edge chips in personal computers and flat-panel televisions.

The market has been concerned about Sony's growth prospects over the longer term beyond its recent obsession with asset sales and cost cutting. The sale of Cell follows after it sold part of Sony Financial last week, bringing the unit public in a 320 billion yen ($2.74 billion) share sale. (See: " Sony Cashes In On Financial Unit")

While it is planning to sink more money into research and development to reclaim technical leadership, exciting new growth areas seem far off, and it will now have to rely on Toshiba, a competitor on the consumer electronics front, for future generations of microprocessors for its games consoles.

Technorati : chip ps3 +

Aerotropolis: A city by itself

The first phase of the modernisation of Delhi International Airport by the GMR-led consortium, which will be completed by 2010 will see an investment of US$ 1.5 billion in commercial real estate development transforming Delhi airport into an airport city - an aerotropolis

According to the land concession agreement for the Delhi airport, of the 5,000-acres of land belonging to the airport only five per cent, or 250 acres can be used for commercial purposes. This will see high-density development of hotels, business centres, retail spaces, convention and exhibition centres, golf courses and entertainment centres. Says Mridul Upreti, head, Capital Markets, Jones Lang LaSalle Meghraj, "An aerotropolis, because of its high density and high quality development, strategic location and good connectivity would soon outdo even Connaught Place in economic activity and commercial rentals."

Ever since Dr John D Kasarda, director of the Kenan Institute of Private Enterprise, USA, first introduced the concept of an aerotropolis, the span of an airport has gone up exponentially. In the new model, airports, besides their core infrastructure and services, have created significant non-aeronautical commercial facilities, services and revenue streams. Consequently, they are extending their formal reach and impact with development along airport arteries up to 20 kms outwards.

In fact, Hong Kong International Airport already has a mini-city on a nearby island for its 45,000 workers, and soon the SkyCity, a complex of office towers, convention centres, and hotels is also being developed. China is spending US$ 12 billion for the Beijing Capital Airport City that will accommodate four lakh people. Dubai is also looking at developing the largest aerotropolis, Dubai World Central, a US$ 33 billion airport city capable of supporting a permanent population of 7.5 lakh.

But can such a development take place in India? According to Sanjay Dutt, deputy MD, Cushman and Wakefield, whenever there is large scale economic activity, the area around it becomes vibrant. Airports are the hub of very enormous economic activity including cargo, car rentals, hotels, retail, etc. Says Dutt, "Prices shoot up because people start calculating returns on property near the airport. In a developing economy like India, the value is expected to go up significantly. It can even go up by 100 per cent".

However, DTZ director Vivek Dahiya feels that as the cantonment area on three sides and Palam Village on the fourth surround Delhi airport, no major development can take place outside the airport area. "Moreover, the DDA master plan does not allow for commercial centres like hotels to come up near the airport. Only if DDA revisits the policy and allows commercial development can the real estate prices around the airport also go up."

Interestingly, many airports are now getting a bigger of their revenues from non-aeronautical sources than from aeronautical sources (landing fees, gate leases, passenger service charges). Globally, 70 per cent of an airport revenue is generated through non-aeronautical sources, while in India it is still a lowly 30 per cent.

Due to the significantly higher incomes of airline passengers (typically three to five times higher than national averages) and the huge volumes of passengers flowing through the terminals , it should not be surprising that terminal retail sales per square metre average three to four times greater than shopping malls and downtown shops. As a result, terminal commercial lease rates tend to be the highest in the metropolitan area.

Commenting on the high commercial rentals of airports in India, Dutt says, "The passenger is bound to shop, eat, etc, and has certain needs. Therefore, outlets at the airports design and put retail items accordingly. Moreover, the quality of experience is assured. Secondly, in India, the quality of retail space is very limited and so is organised retail. With lots of airports getting privatised and developed, we will witness a rush to occupy retail space."

The new US$ 4 billion Suvarnabhumi airport in Thailand, will see more than 100 million passengers a year passing through the airport, about as many as JFK, LaGuardia, and Newark airports combined. Within 30 years, a city of 3.3 million citizens - larger than Chicago now - will have emerged around Suvarnabhumi.

Delhi International Airport, has already invited expression of interest from Indian and international real estate investors to develop a complete range of hospitality services to build various categories of hotels and related facilities at the Delhi airport. But no other airport in India is looking at developing similar facilities. According to analysts, commercial development near the Mumbai airport would affect real estate prices. "Mumbai airport is in the heart of the city, unlike Delhi. If the slums get cleared, the real estate value of the area surrounding the airport will substantially increase," Dahiya said.

Amsterdam Schiphol, through its Schiphol Real Estate Group, has been working for over a decade on the cityside commercial development. Nearly 58,000 people are employed at Schiphol, which integrates multi-modal transportation, regional corporate headquarters, retail shopping, logistics and exhibition space to form a major economic growth pole for the Dutch economy. Others, though not quite on the scale of Amsterdam Schiphol or Seoul's Incheon, have given commercial development a high priority in their master planning (Brisbane, Vienna, Calgary, Zurich and Stockholm-Arlanda). Many of these have implemented the airport city concept in their strategic development.

There are different requirements that can stipulate the developing of an aerotropolis. For companies engaged in IT services it is very important to have good air connectivity. According to a report, high-tech professionals travel by air at least 60 per cent more frequently than others. Such firms are increasingly looking at setting up their offices near airports. The Washington-Dulles Airport access corridor in Northern Virginia and the expressways leading to Chicago's O'Hare International Airport are good examples.

When commercial centres start coming up around an airport, it also leads to a high rate of employment generation faster than other suburbs situated at similar distances from other city centres, which further leads to development of an aerotropolis.

Technorati : Aerotropolis:

VIVACE R&T project delivers major improvements for future Aeronautical

A Virtual Aeronautical Collaborative Enterprise" (VIVACE) Research and Technology project focuses on simulation and modelling techniques for aeronautical products during their design and development phases with the objective of reducing development time and costs .

The final results of VIVACE are presented at a public Forum held in Toulouse from 17th to 19th October.

VIVACE is a very large European Commission co-funded R&T project, grouping 63 companies and research institutions from the aeronautic sector such as Airbus, Rolls Royce, Snecma, Thales… It was launched in January 2004 and will be fully completed at the end of 2007.

Major innovation and progress has been developed within the scope of the project in seven key areas of the product development process, providing solutions in "Design Simulation", "Virtual Testing", "Design Optimisation", "Business and Supply Chain Modelling", "Knowledge Management", "Decision Support" and "Collaboration in the Extended and Virtual Enterprise".

Through industrial simulations of a part of the aircraft, of the engine or of a development process, reflecting both the Virtual Product and the Virtual Extended Enterprise, major improvements have been obtained in terms of processes, methods and tools.

VIVACE contributes to answering the Advisory Council for Aeronautics Research in Europe (ACARE) Vision of halving the time to market for new products, increasing the integration of the supply chain and maintaining a steady and continuous fall in travel costs. By using the latest innovations in advanced simulation and modelling techniques, it will provide the means to get the best possible knowledge about the product prior to its physical development, thus reducing the development cost, shortening time to market and further improving product quality.

More information on the VIVACE project can be found at: www.vivaceproject.com

Technorati : Airbus, R&T-project