IBM has confirmed that it will cease development of the Cell Processor used on the PS3 among other systems. This does not equate to an end of production.

IBM has been co-developing the Cell Processor along with Sony and Toshiba. Even after the PS3's launch better models of the processor have been developed between the three. IBM's most recent and supposedly last version of the Cell Processor is the PoweXCell 8i which is currently used in the world's second fastest supercomputer. IBM will not develop the planned 32 SPE version of Cell.

The status of actual development of the Cell Processor does not equate to the status of production of current models of the processor for the PS3. No reports have been made on changes to production or production of PS3s.

Despite ending development of the Cell itself, IBM will still incorporate parts of the Cell into future designs. Apparently they will pursue a CPU/GPU hybrid route in the future.

Technically, Sony can still hire IBM to develop a new Cell Processor for the Playstation 4. Their decision in this matter could affect things like backwards compatibility with PS3 games when the next console comes around.