High profile Singaporean contract chip maker Chartered Semiconductor Manufacturing are set to manufacture a new 45 nanometre (nm) processor which is designed for use in video game consoles and most likely the Xbox 360. This new process could give Microsoft further room to adjust their pricing levels comfortably.

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"We have customers' activity for products in the CPU space that goes into a video-game device," Chia Song Hwee, Chartered's president and CEO, said when discussing the company's 45nm manufacturing plans with analysts during a recent conference call.

Chia didn't name the CPU customer but was likely referring to Microsoft, which uses Chartered to manufacture its Xbox 360 processor.

The 64-bit Xbox 360 processor is a custom chip based on three 3.2GHz Power PC cores. Chartered has so far produced 90nm and 65nm versions of the Xbox 360 processor for Microsoft using a SOI (Silicon-on-Insulator) process licensed from IBM.

The numbers that describe each chip version refer to the process technology used to make them, and describe - in billionths of a metre - the average size of the smallest features that can be created on a piece of silicon. Smaller is better when it comes to chips and moving to a more advanced process technology offers several benefits.