Thanks to forum member Spartan_X for posting this in Neowins BPN
Companies manufacturing components for Sonys PSP handheld were initially told by the electronics giant to expect production numbers of 18 million units for the first business year, according to Japanese business publications company Nikkei BP. Strangely, when mentioned in Sonys annual financial report, only 12 million were slated for production; identical to the number of slim-line PS2s ordered.
If this is in fact true, the reason for cancelling 6 million units hasnt been made clear. Nikkei BP cites the possible shortage of processors for Sonys handheld as an explanation, but many market analaysts believe that production might have been scaled back due to poor initial sales. The lower demand has not affected the companys PS3 production schedule however, which is still slated for mass production by late 2005 or early 2006.
News source: Gamespot