Microsoft finally seems to address the reported heat problems in the upcoming version of the Xbox 360 game console, codenamed "Jasper".

Jasper is expected to be released in August, and it will be equipped with new graphics (GPU) and north-bridge chips, built upon the 65nm manufacturing process.

Taiwanese foundries Taiwan Semiconductor Manufacturing Co. (TSMC), Advanced Semiconductor Engineering Inc. (ASE) and Nanya PCB Corp. have already started the production of the new chips, according to a CENS report.

Microsoft will make available its Jasper version of XBox360 game consoles in August this year and has contracted dedicated chipmakers to build chips for the latest machine. Contracts for manufacturing, packaging and testing the 65nm Xenon microprocessors have gone to IBM.

TSMC is chosen to make the 65nm graphics chips and north-bridge chips for Xenon chips, ASE is contracted to package and test the two chips, and Nanya has won orders to supply flip-chip packaging substrates.

Microsoft's transition to 65nm is expcted to resolve the main heat problems reported for the first generation of the console, while it could also allow Microsoft to reduce manufacturing costs and lead to another round of price cuts.

Current version of the Xbox 360 (Falcon) uses 90nm chips made by TSMC and IBM.

The next step for the Xbox 360 console is dubbed "Valhalla," which will integrate both the GPU and CPU in a single package. Release should not be expected earlier than Q2 of 2009.