Chartered, Microsoft Sign Chip Deal For Xbox 360

The world's fourth-largest contract chipmaker, Singapore-based Chartered Semiconductor Manufacturing, announced that it has signed an agreement with Microsoft for the manufacturing of CPUs for the Xbox 360, using IBM's 65-nanometer, silicon-on-insulator semiconductor technology, as opposed to the current 90-nanometer Xbox 360 CPU production. Production set to begin during the first quarter of 2007. The news comes following news earlier in the week indicating that Taiwan-based electronics manufacturer Wistron, one of three Xbox 360 manufacturing partners, was stepping up production of the Xbox 360 console, targeting one million units of consoles manufactured per month by year end. Chartered also said that through an agreement with IBM, it will expand its use of the new technology into areas such as consumer, multimedia, communications, automotive and industrial applications. Together with IBM, Chartered supplies the CPU chips for the Xbox 360. The agreement came following news that Chartered beat market expectations for the second quarter in a row, this time due to steady demand for the Xbox 360, and even taking into account the delayed release of the PlayStation 3, which Chartered will also being supplying chips for. For the three months ended March 31, the company posted a net profit of $25.3 million, compared to a net loss of $84.5 million the previous year. Analysts had only forecast a net profit of $16.1 million for the company. In addition, revenue nearly doubled to $355.2 million from $181.4 million last year. However, the company expects revenue to rise only about 2 percent in the second quarter. "We are forecasting this modest growth despite the lower demand for video game consoles due to the seasonality factor, as stronger demand from applications in the computer and communications sectors more than offset the decline in video game consoles," commented Chartered Chief Financial Officer George Thomas.