Nvidia, Microsoft Resolve Xbox Dispute

The issue had been a sore spot for Nvidia, which wanted to preserve the potentially lucrative deal with Microsoft, but couldn't continue under the current terms. The chip maker complained that its deal to supply the graphics subsystem of the Xbox was structured such that the graphics company was losing money on each chip produced. Ostensibly the problem stems from early, misguided assumptions of Xbox sales. It is believed that the price at which Nvidia agreed to its chip to Microsoft was based on a higher volume of Xbox sales, and sluggish console sales forced Nvidia to scale back manufacturing to the point where it no longer made a profit on each chip. The two companies entered into arbitration to settle the matter, and apparently resolved their differences. The terms of the deal were not revealed, but Nvidia said it would provide more information during a conference call on February 13. Today Nvidia's stock was up just 8 cents, or one percent, closing at $10.22.