NVIDIA and Microsoft make-up – End arbitration over XBox chip pricing

An NVIDIA press release announced that they had reached an agreement with Microsoft over the pricing dispute of the GPU (graphics) and MPU (audio/networking) chips that NVIDIA manufacturers for the XBOX. NVIDIA president and CEO Jen-Hsun Huang, states “This is a win for both companies, and we couldn’t be more delighted with the results, NVIDIA and Microsoft can now take our partnership to the next level and focus our substantial resources to maximize the full potential of Xbox game console.” which is seemingly some happy-happy joy-joy speak if you’ve read an earlier report from The Inquirer that NVIDIA “will not interfere” with Microsoft’s arbitration attempt. We speculate that they reached some happy arrangement about NVIDIA manufacturing chips for XBOX II and that NVIDIA is firmly entrenched in the XBOX II camp, willingly or not. This is an about face from earlier this week even though there were rumors of Microsoft courting ATI from last month. Given that XBOX has only sold about 8 million (compared to PS2’s 50 million), this might not be a good deal for NVIDIA, especially if it turns out that they have to manufacture the chips at a loss for Microsoft. Reuters reported that NVIDIA claims that Microsoft owed them $46.2 million back in July, NVIDIA’s fiscal Q2.Details of the exact agreement are due out at NVIDIA’s quarterly conference call Feb. 13th.

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