Arbitration sees nVidia ordered to continue Xbox production

Despite losses and failing relationship

Posted by Staff
Arbitration sees nVidia ordered to continue Xbox production
We brought you news some months ago that following a breakdown in communication between Microsoft and nVidia, the two firms went to an independent arbitrator to settle various disputes.

The relationship broke down when nVidia started to kick up a fuss bacause it was losing money on the chipsets it supplies for Microsoft's Xbox console. Both firms agreed to enter into a binding session of arbitration as they just could not agree how much MS should pay per chipset produced.

When the deal was initially announced, amid fanfares, handshakes and dollar-bill grins, Microsoft paid nVidia a $200 million advance. However, relations started to break down when Microsoft changed the specification of the technologies in a bid to make the Xbox more secure when operating online. This rendered as much as 12 million worth of existing chipsets obsolete.

This is just an interim ruling that states nVidia must continue to produce chips, for which Microsoft pays in advance, until the case is settled mid next year. The ruling states that Microsoft will pay the split in the difference the two firms have priced the units at, as well as their original price.

nVidia has warned that its business might be "materially harmed," whatever the final outcome may be.

We'll bring you updates, as they break.


Posting of new comments is now locked for this page.