"Well, we didn't have to wait for anyone to crack open their PS3 to check, because Sony has squashed all rumors that the new $399 40GB PlayStation 3 SKU is featuring 65nm chips (shrunk from their 90nm standard). While we'll save you the copy and pasted rough auto translation, Sony essentially said that 65nm is not here yet but that they were working on it for the future. Most of the speculation stemmed from the new model needing 65W less to operate—a power savings of around 30%. So while we're still interested to see where Sony found all this energy savings, it wasn't from a smaller chipset. And ultimately, all this matters a lot more for Sony's profits than it does our enjoyment. Ratchet & Clank, anyone?"

http://gizmodo.com/gadgets/rumor-smashed/sony-confirms-40gb-ps3-dont-use-65nm-chips-318543.php 

"We'd been hearing that Sony's new 40GB PS3 featured a revised design with a 65nm Cell processor and improved cooling, but sadly it looks like those reports were in error -- a Sony spokesperson has told Heise Online that the 40GB model continues to use 90mn processors, but does feature an updated design with a lower power consumption of just 120 to 140 watts, compared to 180 to 200 watts for the older models. Sony says its still planning on moving to 65nm processors in the near future, but for now, it looks like the PS3 is 90nm across the board"

 http://www.engadget.com/2007/11/03/sony-says-the-40gb-ps3-is-still-using-90nm-chips/

Hah. And after all those sites reported this story as fact.

I was hoping it was true, but the evidence did seem a little inconsistent...

wow, i never even heard this one. i always thought their projected date for the new chipset was 2008 anyways?

I don't even know why they'd bother with a new chipset aside from saving power, it's not like with the 360 with the overheating and stuff.

cost reduction.

I would have thought it would cost MORE to further miniaturize the chipset...

The costs saving comes from two fronts. You can fit more chips on the same wafer, so you get more chips for less work and materials. Also you can use a smaller power supply, less cooling and less expensive parts.

Making the process smaller = smaller chips = more chips per wafer = lower cost per chip.