Report: Microsoft Looks To Cheaper Chips To Lower Xbox 360 Costs

San Jose Mercury News journalist Dean Takahashi has reported that Microsoft could be looking to a new internally redesigned Xbox 360, codenamed 'Falcon,' as a means to not only reduce production costs, but also reduce the console's price at the retail level as well. According to the report, Microsoft plans to replace its current 90-nanometer chip manufacturing process with a less costly 65-nanometer process, resulting in smaller, more efficient microprocessors and graphics chips for the Xbox 360. The result, according to Takahashi, will be internal electronics that generate less heat, and thus result in consoles that are less prone to the infamous 'red ring' general hardware failure error, the driver behind Microsoft's recent warranty extension. The 65-nanometer technology also makes for much more possible room within the Xbox 360 hardware, which the report speculates could be used to house the console's current brick-style power supply in future models. In addition, as the chips themselves make up the bulk of the console's manufacturing costs, the savings from the shift to the new process could eventually be passed along to the consumer by way of a less expensive Xbox 360. When questioned about the Falcon project, Microsoft's Peter Moore declined to confirm such an initiative, instead telling Takahashi, “We have a bunch of different projects that cost reduce and improve quality as you find issues, as does our competition. Once you get millions in the field, you learn about the box under all kinds of different circumstances, you can adjust and tweak what you do accordingly.”