Chartered Semiconductor Manufacturing, a contract semiconductor maker, has signed an agreement with Microsoft Corp. for the manufacturing of microprocessors for the Xbox 360 game console using 65nm process technology, which may significantly lower pricing of such chips. 

Production of Xbox 360 central processing units is expected to begin in the first quarter of 2007, and will support the Xbox 360’s growing demand and expanding market reach. The announcement follows Chartered’s manufacturing of 90nm SOI CPU products for the Xbox 360 console’s launch, through an agreement with IBM, a co-developer of 65nm and 90nm silicon-on-insulator process technology.  

“We look forward to working with Chartered on the production of such an important component of our Xbox 360 system,” said Larry Yang, General Manager of Xbox Console Development at Microsoft.  

“Chartered's ability to demonstrate the manufacturability of IBM's advanced SOI technology in Fab 7 was key to our selection. We plan to continue with our strategy of dual sourcing from Chartered and IBM’s fabs, which are operationally aligned and compatible, to give us the consistent product quality and flexibility we will need,” Mr. Yang said. 

Microsoft Xbox 360 console is based around microprocessor developed by IBM, high-definition visual processing unit designed by ATI Technologies, I/O controller engineered by SiS and some other key components. The gaming machine will provide a broad set of multimedia capabilities in addition to games. Depending on the bundle, Microsoft Xbox 360 costs $299 or $399.