Microsoft Corp. and Taiwan Semiconductor Manufacturing Co. have announced that TSMC will supply embedded dynamic random access memory (eDRAM) chips for Microsoft Xbox 360 game console. The result of the deal could be reduced building costs of the machine.

Graphics sub-system of Microsoft Xbox 360 game console, which is known as Xenos, consists of two chips, the first one has 48 unified shader processors and provides processing horsepower, whereas the second consists of render back ends as well as 10MB of high-speed eDRAM, providing full-scene antialiasing without performance drops. Until today, the eDRAM core was produced by NEC, but Microsoft decided to switch the manufacturer, most likely to reduce the production costs.

“TSMC provides the proven manufacturing and chip implementation services required to build a competitive silicon component in volume. The TSMC 90nm eDRAM process is exactly what we need to further strengthen our position in console gaming and entertainment,” said Bill Adamec, senior director of semiconductor technology of Microsoft.

Technically, the new eDRAM core of the Xenos graphics sub-system is the same as that used now: it has capacity of 10MB and can operate at 500MHz with minimal latencies. The only change is believed to be lower production cost. However, Microsoft did not say whether it would terminate or prolong the agreement for eDRAM core with NEC.

Microsoft Xbox 360, which is based on a custom PowerPC microprocessor developed by IBM, uses components made by different suppliers, some of which directly compete against each other. Currently Xenos graphics processor is fully made at TSMC, central processing unit is made by Chartered, whereas I/O processor, which was engineered by SiS, is produced by United Microelectronics Co.

Microsoft, like all suppliers of game consoles, is constantly looking forward to reduce production costs, as gaming machines are typically sold with a loss. Even though Microsoft managed to reduce build-up costs of the Xbox 360 by 40% in the first year, it recently decided to make the product more affordable and started to cut its pricing around the world.