Hardware:

The PSX-2 Chipset will comprises of:

• DSP
  The custom high-performance DSP (Digital Signal Processor) will be running at 250 Mhz and will provide the floating-point calculations needed for 3D graphics. The DSP will also include hardware MPEG-2 Video decoding which should enable you to playback DVD movies on the PSX-2 !
• RISC
  The RISC (Reduced Instruction Set Processor) will also be running at 250 Mhz and it will be based on the MIPS technology. It will have 10+ millions transistors, 100+ multimedia extension instructions, 8K data cache, 16k command cache and 16k internal cache.
  The CPU reportably will be able to push about 4.5 million triangles, compared to the Dreamcast's 3.5 million.
• 3D Graphics Chip
  There is for now no information which chipset will drive the 3D graphics. Sony will want to keep this under wraps because this will be the vital part for the capabilities of the PSX-2.

This chipset will evidently provide the immense math-crunching prowess required to compute, but not display, the system's reported 12 million NURB (Non-uniform Rationalized B-Spline) polygons per second.

Toshiba will be producing the DSP chip & RISC processor and they will introduce them at the International Solid State Circuit Conference in the US this February.

LSI Logic , manufacturer of the custom ASIC processors found in the PlayStation, will be providing "significant" silicon for the new system as well.

The PSX-2 will almost certainly be driven by a DVD drive, the advantage of this is that DVD can hold up to 4.7 Gb compared to the 650 Mb on a CD-ROM.

the PSX-2 laser information has been released by Sony, it will use two modified lasers (DVD's use two at present anyway.) Both will be modified so it can also read PSX-1 CD's.