Mercury News writes Microsoft will soon put 65nm processors in its Xbox 360 consoles and that we can expect 45nm CPUs in the Xbox 360 within 2 years. These chips are smaller than their 90nm predecessors and will be cheaper to produce:
Everyone knows that console makers cut the prices and costs on their consoles over time. But you may not be aware that the primary chips – microprocessor, graphics, and the Ana video processing chip – are the bulk of the cost of the machine. Microsoft started making the Xbox 360s in August, 2005, with a 90-nanometer process. It is overdue to switch to the newest technology, 65 nanometers, but that day has finally come. It may be some time — a year, maybe two — before it moves on the a 45-nanometer process.
But it’s worth it. I recall that Ken Kutaragi said that by moving along the semiconductor manufacturing cost curve with the PlayStation 2, Sony was able to reduce the size — and therefore cost — of the PlayStation 2’s original chips to just 13 percent of the original over the life cycle of the PS 2.
If you cut the costs on the chips, you can cut the overall cost of the system. You get ancillary benefits such as using a smaller motherboard, more air flow inside the console, and the ability to take the big giant power supply in the Xbox 360’s power brick and put it inside the console.
Microsoft is in the process of qualifying the new Falcon chips and motherboard this summer. I expect it will launch Xbox 360s with the new Falcon innards this fall. That is why the company has been able to say that it has solved its manufacturing quality problems. Microsoft is likely to spend a little more money on heat sinks to make sure that the overheating problem doesn’t resurface with Falcon.