The company also said it was beginning production on a new chip for the PlayStation 2 that would lower manufacturing costs, although the savings might not necessarily make their way to consumers right away.
Sony is planning to first install a test production line for the Cell chip in Nagasaki Prefecture. Ultimately, along with sister company Sony Computer Entertainment, it is planning to invest £1 billion (US$1.6 billion), in a full manufacturing plant there, Sony executives said at an event in Japan this week.
The announcement followed a day after the launch of Sony's latest addition to the PlayStation 2 line, the high-end PSX, which includes a DVD recorder and other features.
Cell had been expected in late 2005 or early 2006. Sony and development partner Toshiba have said they plan to use Cell technology in other products besides the PlayStation line, including set-top boxes, digital broadcast decoders, high-definition TVs, hard-disk recorders and mobile phones.
Sony also said it is planning to begin manufacturing a new chip for the PlayStation 2 this month, shrinking the existing architecture to a 90-nanometre manufacturing process. Shrinking the size of the chip's features allows Sony to fit more of the chips on a single silicon wafer, reducing manufacturing costs as well as power consumption and heat output.
The new chip combines the console's microprocessor and graphics processor, and will at first be manufactured in the hundreds of thousands of units before moving into the millions of units by next year, Sony said. The company has invested more than 300bn yen (£1.7bn) in shrinking the PS2 chip, which are costs the company expects to quickly recover because of lower manufacturing costs.
The Cell chip, planned to be a thousand times more powerful than the PS2's processor, will be built using a 65-nanometre process and 300mm silicon wafers, according to Sony.
In order to increase its performance, Cell will boast a multicore architecture, in which a single chip may contain several stacked processor cores.
Since early 2001, Sony Computer Entertainment, IBM and Toshiba have teamed to develop Cell, touted as a "supercomputer on a chip". Elements of its design are expected in future server chips from IBM.
ZDNet U.K.'s Matthew Broersma reported from London.
CNETAsia's John Lui contributed to this report.