The Xbox 360 and PS3 consoles' chief components will soon be transitioned to 65nm to help shrink the gap between retail prices and manufacturing costs:
During a recent Sony investor conference, the company said it has already started production of various sized chipsets on 65nm node and noted that die-size could be shrunk by 40% in comparison to 90nm process, indicating that corresponding costs could be reduced along with the reduction in die-size. In addition to the prepared migration to more advanced node production, Sony said it also plans to reduce the number of parts in the PS3 in attempt to see "drastic" cost reductions.
iSuppli's research shows that, at present, manufacturing costs of the two PS3 models – 20GB and 60GB-hard disk drive (HDD)– are US$306.85 and US$241.35 higher than the current retail prices.
Microsoft is facing a similar situation. The bill-of-material for its premium Xbox 360 is $525 while it's selling in shops for only $399/