Nvidia ordered to supply Xbox chips

According to a Reuters report, the arbitration panel responsible for settling a contractual dispute between Microsoft and Nvidia has made an interim ruling that orders Nvidia to ensure a reasonable supply of Xbox graphics chips. The dispute between the two companies arose in April over concerns about the price Microsoft is paying for the graphics chip used in the Xbox console and the number of chips Nvidia is required to supply to Microsoft.

Nvidia stated in an SEC quarterly report that "the arbitration panel has issued an interim ruling that the company must supply Microsoft's reasonable requirements of chipsets, but no minimum or maximum amount has been set overall or for any particular period."

Nvidia has stated that if it loses the arbitration, it may have to sell the chips to Microsoft at a loss. Since the initial launch of the Xbox last November, Microsoft has sought to reduce the production cost of the console and has made changes in its production partnerships, including moving the 2879163hardware assembly to less-expensive locations.