Microsoft Corp. reportedly plans to release a new version its Xbox 360 video game system code-named Jasper in August and has already assigned IBM and Taiwan Semiconductor Manufacturing Co. to make chips for the new game console. However, there are other important rumours: TSMC got orders to produce the chip for code-named Valhalla Xbox 360 design, which is rumoured to combine microprocessor and graphics chip in a single piece of silicon.

The code-named Jasper design of the Xbox 360 game console will use ATI Xenos graphics and memory controller hub (GMCH) made using 65nm process at TSMC as well as IBM Xenon central processing unit (CPU) produced at IBM’s 65nm nodes. The new system design is projected to consume less electricity, use less complex cooling systems and also produce less noise.

By contrast, current Xbox 360 design named Falcon utilizes GMCH and eDRAM cores manufactured using 90nm process technology at TSMC as well as CPU built at IBM using 65nm fabrication process. The first-generation Xbox 360 used 90nm chips.

TSMC is chosen to make the 65nm GMCH chips, Advanced Semiconductor Engineering (ASE) is contracted to package and test the chips, and Nanya has won orders to supply flip-chip packaging substrates, reports China Economic News Service.

What is, perhaps, more important than the facts that TSMC again got orders to produce ATI Xenos GMCH and IBM land orders on IBM Xenon CPU at expense of Chartered Semiconductor (which once promised to start making 45nm chips for Advanced Micro Devices in 2009), is that “chips” for next-generation Xbox 360 code-named Valhalla will also be made at TSMC. Earlier rumours transpired that Valhalla features a chip that combines CPU and GMCH. In order to build such chip at TSMC, Microsoft either needs to disclose certain design rules of IBM’s fabrication process to the Taiwan-based semiconductor manufacturer, or completely rework the CPU according to fabrication process of TSMC.

Microsoft did not comment on the news-story.

Microsoft Xbox 360 console is based around triple-core 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 provides a broad set of multimedia capabilities in addition to games. Currently Microsoft Xbox 360 is available for $279, $349 or $449 in the USA depending on the version.