According to the German site, Heise Online, SCEE has smashed the rumor that the new 40GB Playstation 3 will feature a new 65nm Cell processor.

Despite the fact that it doesn't feature a smaller processor, the new 40GB PS3 will consume less power than its predecessors. To be more exact, it will consume around 32.5 percent less, and this comes as a result of different components used in the new model.

Sony Computer Entertainment Europe said that the 65nm Cell is indeed coming, but just not yet. The new 40GB PS3 lacks backward compatibility, comes with fewer USB ports and no memory card reader, but it's priced at just $399.99.