Microsoft Corporation and Taiwan Semiconductor Manufacturing Company announced Tuesday they had reached an agreement for TSMC to provide semiconductor manufacturing services for Microsoft’s future Xbox products. The details about the agreement were not issued.

TSMC is one of the world’s largest semiconductor manufacturing foundries. The company produces chips for a number of leading fabless semiconductor design houses, including NVIDIA Corporation, who supplies core-logic chips for Microsoft’s current Xbox console. Microsoft is reportedly going to dramatically change its strategy of getting logic components for its Xbox 2 console that is to be released on the middle of the decade. Instead of getting chips from its partners, Microsoft inked technology agreements with ATI for graphics technologies, IBM for microprocessors as well as SiS for I/O and multimedia technologies and is likely to manage chip manufacturing itself.

“TSMC has consistently demonstrated industry leadership in the development and deployment of highly advanced semiconductor process technologies for high-volume manufacturing,” said Todd Holmdahl, Xbox General Manager of Microsoft Corporation.

“It was this solid record of achievement that led us to work directly with TSMC on semiconductors targeted to our future game consoles products,” the Microsoft’s rep continued.

Under the terms of the agreement, Microsoft will gain direct, collaborative access to TSMC’s fabrication process called Nexsys, some sources reported. Nexsys is a 90nm leading process technology from TSMC that features nine-layer copper interconnect, with an extra redistribution layer optional for flip-chip package, low-k dielectrics with k less than 2.9 for the lowest RC delay and power consumption as well as a number of other innovations.

It is not clear which exactly chips TSMC will produce for Microsoft’s Xbox 2 console. While ATI Technologies typically outsources production of its graphics processors to Taiwan Semiconductor Manufacturing Company, IBM has its own facility, while Silicon Integrated Systems outsources fabrication to TSMC’s rival UMC.