Report from Japan suggests that a mini PS2 will be included in every PS3. A surprising report has emerged from Japan's Ultra One monthly technology magazine. The magazine's July issue reports that Sony will be achieving backwards compatibility on the PlayStation 3 not through software emulation, as previously announced, but through physical hardware.
The magazine states that the PS3 hardware, in its current form, includes the core PlayStation 2 chipset. This presumably means that initial PS3 units will include the single Emotion Engine (the PS2 CPU) and Graphic Synthesizer (the PS2 graphics chip) combo chip that powers the slim model PS2.
Of course, including the extra hardware drives up costs. The magazine adds that Sony plans on removing the PS2 chipset from future revisions of the PS3 hardware once it has finished development of a proper software-based PS2 emulator. Such a removal would help bring down costs for the system.