FOR IMMEDIATE RELEASE

Sony Nears Breakeven Point on PlayStation 4 Hardware Costs

El Segundo, Calif. (Nov. 19, 2013)—For the past seven years, Sony Corp. has offered various revisions of the PlayStation 3 console, many of which were sold at a loss.

However, with the new PlayStation 4, Sony has produced a design whose component and manufacturing costs are starting out lower than its price tag—paving the way for the company to quickly attain profitability on hardware sales, according to preliminary results from the Teardown Analysis Service at IHS Inc. (NYSE: IHS). Furthermore, the PlayStation 4 delivers major upgrades where it counts, with a processor and memory subsystem that pushes the envelope in terms of performance and product design.

The bill of materials (BOM) for the PlayStation 4 amounts to $372. When the manufacturing expense is added in, the cost increases to $381. This comes in $18 lower than the $399 retail price of the console.

When other expenses are tallied, Sony initially will still take a loss on each console sold. But the relatively low BOM of the PlayStation 4 will allow the company to break even or attain profitability in the future as the hardware costs undergo normal declines.

“When Sony rolled out the original model of the PlayStation 3 in 2006, our teardown analysis revealed that the console delivered supercomputer-class performance at a price equivalent to a notebook PC,” said Andrew Rassweiler, senior director, cost benchmarking services for IHS. “However, this achievement came with a major downside for Sony, as the BOM costs for most of the different versions of the console were in excess of the retail

prices, in some cases by more than $100. Although Sony brought the PlayStation 3’s costs down significantly during its lifetime, the company’s intent was never to make money on the hardware, but rather to profit through sales of games and content.”

“This time, Sony is on a greatly shortened path to the hardware break-even point, or even profitability, with its cost-conscious PlayStation 4 design. The company is pulling off this feat, despite offering a brand-new design that once again includes avant-garde components that yield superfast performance. The PlayStation 4 keeps a lid on costs by focusing all the additional expense on the processor and memory—and reducing outlays for the optical drive, the hard disk drive (HDD) and other subsystems,” Rassweiler noted.

The PlayStation 4 is more economical for Sony than even the revision of the PlayStation 3 torn down by IHS, which was shipped in 2009, a model dubbed the CECH-2001A. That version of the PlayStation 3 carried a $336 BOM and manufacturing cost compared to a $299 sales price.

Table 1 attached presents the preliminary BOM and manufacturing cost estimate of the PlayStation 4. Note that the teardown assessment is preliminary in nature, accounts only for hardware and manufacturing costs, and does not include other expenses such as software, licensing, royalties or other expenditures.

Big money/big chip

The costliest subsystems in the PlayStation 4 are the core processor and the associated graphic dynamic random access memory (DRAM), which together entail $188—representing slightly more than 50 percent of the BOM of the entire console. This compares to only 29 percent for the fourth-generation PlayStation 3.

For the PlayStation 4, Sony clearly has integrated two functions—the core central processing unit (CPU) and graphics processing unit (GPU)–that were previously two discrete ICs.

“Sony clearly has made the decision to focus on balancing the brains and economics of the console, with the processor and memory dominating both the design and the BOM,” said Jordan Selburn, senior principal analyst for consumer platforms at IHS. “This processor is a monster, with the surface

area of the chip amounting to about 350 square millimeters. That is three times larger than any other chip manufactured using equivalent-process technology that has been examined by the IHS Teardown Analysis service. Despite the remarkable silicon acreage of this device, it comes at a price point attractive to mainstream consumers while delivering a very high level of performance. Future versions, manufactured with even more advanced semiconductor processing technology, will further enhance both cost and

performance.”

The processor exhibits a high degree of integration, using advanced 28-nanometer semiconductor manufacturing, and combining both the CPU and GPU into a single device. The Advanced Micro Devices Inc. processor includes an eight-core Jaguar CPU and a Radeon GPU. This processor costs $100.00, IHS estimates, compared to an $83.55 combined total for the two prior, equivalent integrated circuits from IBM and Nvidia that were used in the PlayStation 3 that IHS analyzed in 2009.

Precious memory

The cost increase for the DRAM is even more remarkable, at an estimated $88.00, up from just $9.80 for the fourth-generation PlayStation 3, i.e. the CECH-2001A. Note that the $9.80 total does not include the DRAM that was mounted directly to the Nvidia processor in the PlayStation 3 that IHS analyzed in 2009. This cost increase is due to the PlayStation 4’s adoption of advanced Graphics DRAM (GDRAM) GDDR5.

“GDRAM DDR5 memory has much higher bandwidth than the DDR3 used in the Xbox One. It also works better with parallel computing and is designed specifically to enhance graphics performance,” said Mike Howard, senior principal analyst, DRAM & memory, for IHS. “Because of its cutting-edge status, GDRAM GDDR5 is more expensive than DDR3, which is used in high volume in products including PCs and older game

consoles.”

Cost cuts Offsetting the increased costs for the processor and memory are unchanged or lower expenses for other subsystems.

The biggest area of cost reduction is in the optical drive, at only $28, compared to $66 for the CECH-2001A PlayStation 3. With the optical drive mechanism remaining largely unchanged since 2009, Sony was able to capitalize on the dramatic price erosion in this product during the past four years.

Sony trimmed another $10 from the BOM by using a more integrated design overall for the PlayStation 4. The design allowed Sony to reduce the number of small-sized integrated circuits, discrete semiconductors and passive components. The total cost of these devices amounted to $40.00 in the PlayStation 4, down from $50.23 in the CECH-2001A PlayStation 3 ().

Another $5 reduction was achieved in the mechanical portion of the design, including enclosures—like plastics and metals--and in the electro-mechanical content, such as printed circuit boards, connectors and wire harnesses.

More bang for the buck

The hard disk drive in the PlayStation 4 is $1 cheaper than the one in the CECH-2001A PlayStation 3, despite a major jump in capacity to 500 gigabytes (GB), up from 120 GB. This cost reduction reflected the major decline in HDD costs during the past four years.

Table 2 attached presents a summary of major components and their suppliers for the PlayStation 4.

Please visit our pressroom at the URL below to access photographs of the PlayStation 4 teardown. Alternatively, high resolution photos can be downloaded via the second link:

https://ihs.newshq.businesswire.com/press-release/design-supply-chain-media/sony-nears-breakeven-point-playstation-4-hardware-costs

Sony PS4 High Resolution Press photos.zip,

Preliminary PlayStation 4 Cost Estimate by Subsystem (in US Dollars)

PlayStation 3 PlayStation 4

CECH-2001A (Dec

2009)(Nov 2013)

Components / Hardware

ElementsPS3 Cost Estimates PS4 Cost Estimates

299.00$ 399.00$

Total BOM Cost 326.50$ 372.00$

Manufacturing Cost 9.81$ 9.00$

BOM + Manufacturing 336.31$ 381.00$

Major Cost Drivers

Console

CPU/GPU 83.55$ 100.00$

DRAM 9.80$ 88.00$

Power Supply 20.35$ 20.00$

Optical Drive 66.00$ 28.00$

Hard Drive 38.00$ 37.00$

Mechanical / Electro-Mechanical 39.69$ 35.00$

Other (Electronic Content) 50.23$ 40.00$

Console Sub Total 307.62$ 348.00$

Controller 13.35$ 18.00$

Box Contents 5.53$ 6.00$

Total missing here 372.00$

Sony PlayStation 4 Key Vendors and Parts - In Descending Order of Component Value

November 2013Assembly Location Qty MfgName MfgPartNbr Preliminary Description

Controller PCB Top 1FUJITSU SEMICONDUCTOR

LTDMB9BF002 MCU, 32-Bit, ARM Cortex-M3 Core

Controller PCB Bottom 1WOLFSON

MICROELECTRONICS LTDWM1801G Audio Codec

Controller PCB Top 1 QUALCOMM ATHEROS INC AR3002-BL3D Bluetooth, Single Chip, Bluetooth V4.0+HS

Controller PCB Top 1 ROHM CO LTD Power Management IC

Controller PCB Bottom 1 BOSCH SENSORTEC GMBH BMI055

Inertial Sensor, 12-Bit 3-Axis Accelerometer

Plus 16-Bit 3-Axis Gyroscope, 6-DoF, Digital

Output

Console Main PCBBottom 1 SONY CORP (AMD) CXD90026GCPU, 8-Core AMD Jaguar, w/ AMD Radeon

GPU, 28nm

Console Main PCBBottom 1 SONY CORP (MARVELL)

CXD90025G

(88EC120-

BNS2)

Network Processor - I/O Bridge Controller

Console Main PCBBottom 1 TBD TBD ASIC

Console Main PCBTop 8SAMSUNG

SEMICONDUCTOR INC

K4G41325FC-

HC03Graphics DRAM, GDDR5, 4Gb

Console Main PCBBottom 8SAMSUNG

SEMICONDUCTOR INC

K4G41325FC-

HC03Graphics DRAM, GDDR5, 4Gb

Console Main PCBTop 1 PANASONIC CORP MN86471A HDMI Transmitter

Console Main PCBTop 1 GENESYS LOGIC INC GL3520 USB Hub Controller, USB 3.0, 4-Port

Console Main PCBBottom 1SAMSUNG

SEMICONDUCTOR INC

K4B2G1646E-

BCK0SDRAM, DDR3, 2Gb, 1.5V

Console Main PCBBottom 1MACRONIX INTERNATIONAL

CO LTD

MX25L25635E

M1-100Flash, NOR, 256Mb, SPI

Console Main PCBBottom 1MARVELL SEMICONDUCTOR

INC

88W8797-

BMP2

Bluetooth / FM / WLAN, SoC, IEEE802.11

a/b/g/n, Bluetooth 4.0+HS, FM Radio

Receiver & Transmitter

Console Main PCBBottom 1MARVELL SEMICONDUCTOR

INC

88EC060-

NN82Ethernet Controller

Console Main PCBTop 1INTERNATIONAL RECTIFIER

CORPRegulator

Console Main PCBBottom 1FUJITSU SEMICONDUCTOR

LTDMCU

Console Main PCBTop 1WINBOND ELECTRONICS

CORPFlash, NOR, 1Mb, SPI

Console Main PCBBottom 2 SKYWORKS SOLUTIONS INC SE2614BT

FEM, WLAN 2.4GHz, IEEE802.11 b/g/n, w/

Integrated PAM, Power Detector & SP3T

Switch

Optical Driver Controller PCBTop 1RENESAS ELECTRONICS

CORPR8J32841FP1 ASIC

Optical Driver Controller PCBBottom 1 ROHM CO LTD BD7763EFV Motor Driver IC

Optical Driver Controller PCBBottom 1 ROHM CO LTD BD9685 Regulator, DC-DC Controller

Optical Driver Controller PCBBottom 1 ST MICROELECTRONICS STM8ED MCU, 8-Bit, 130nm

For more information, please contact:

Jonathan Cassell Senior Manager, Editorial jonathan.cassell@ihs.com Direct: + 1 408 654 1714 Mobile: + 408 921 3754 Or IHS Media Relations press@ihs.com

Assembly Location Qty Manufacturer Part Number Preliminary Description

Controller

PCB

Top 1 Fujitsu Semiconductor Ltd MB9BF002 MCU, 32-Bit, ARM Cortex-M3 Core

Controller

PCB

Bottom 1 Wolfson Microelectronics

Ltd

WM1801G Audio Codec

Controller

PCB

Top 1 Qualcomm Atheros Inc AR3002-

BL3D

Bluetooth, Single Chip, Bluetooth V4.0+HS

Controller

PCB

Top 1 Rohm Cc Ltd Power Management IC

Controller

PCB

Bottom 1 Bosch Sensortec GmBH BMI055 Inertial Sensor, 12-Bit 3-Axis Accelerometer

plus 16-bit 3-Axis Gyroscope, 6-DoF, Digital Console Main

PCB

Bottom 1 Sony Corp (AMD) CXD90026G CPU, 8-Core AMD Jaguar, with AMD

Radeon GPU, 28nmConsole Main

PCB

Bottom 1 Sony Corp (Marvell) CXD90025G

(88EC120-

Network Processor - I/O Bridge Controller

Console Main

PCB

Bottom 1 TBD TBD ASIC

Console Main

PCB

Top 8 Samsung Semiconductor

Inc

K4G41325F

C-HC03

Graphics DRAM, GDDR5, 4Gb

Console Main

PCB

Bottom 8 Samsung Semiconductor

Inc

K4G41325F

C-HC03

Graphics DRAM, GDDR5, 4Gb

Console Main

PCB

Top 1 Panasonic Corp MN86471A HDMI Transmitter

Console Main

PCB

Top 1 Genesys Logic Inc GL3520 USB Hub Controller, USB 3.0, 4-Port

Console Main

PCB

Bottom 1 Samsung Semiconductor

Inc

K4B2G1646

E-BCK0

SDRAM, DDR3, 2Gb, 1.5V

Console Main

PCB

Bottom 1 Macronix International Co

Ltd

MX25L2563

5EM1-100

Flash, NOR, 256Mb, SPI

Console Main

PCB

Bottom 1 Marvell Semiconductor Inc 88W8797-

BMP2

Bluetooth / FM / WLAN, SoC, IEEE802.11

a/b/g/n, Bluetooth 4.0+HS, FM Radio Console Main

PCB

Bottom 1 Marvell Semiconductor Inc 88EC060-

NN82

Ethernet Controller

Console Main

PCB

Top 1 International Rectifier Corp Regulator

Console Main

PCB

Bottom 1 Fujitsu Semiconductor Ltd MCU

Console Main

PCB

Top 1 Winbond Electronics Corp Flash, NOR, 1Mb, SPI

Console Main

PCB

Bottom 2 Skyworks Solutions Inc SE2614BT FEM, WLAN 2.4GHz, IEEE802.11 b/g/n,

with Integrated PAM, Power Detector and Optical Driver

Controller

Top 1 Renesas Electronic Corp R8J32841F

P1

ASIC

Optical Driver

Controller

Bottom 1 Rohm Co Ltd BD7763EFV Motor Driver IC

Optical Driver

Controller

Bottom 1 Rohm Co Ltd BD9685 Regulator, DC-DC Controller

Optical Driver

Controller

Bottom 1 STMicroelectronics STM8ED MCU, 8-Bit, 130nm

Sony PlayStation 4 Key Vendors and Parts (in Descending Order of Component Value)

November 2013

Source: IHS Inc., November 2013

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