One of the employees working on the title told Rumor Reporter that development on the game "stalled completely" due to "infighting and lack of clear direction" which apparently led to increasing costs, which then caused layoffs and some employees to leave the project altogether.
SCEA has employed a new director, but the game may now become a downloadable game instead of a retail title.
Sony have not made any official announcement yet regarding Warhawk, though they did shoot a brief reply back to Joystiq:
"We haven't made any official announcements regarding Warhawk since last year. At this time, we have nothing new to report regarding this title."
Stay tuned for further updates.