High Xbox 360 failure rates because of cost-cutting with graphics hardware?
According to Gartner vice president and chief analyst analyst Bryan Lewis, Microsoft’s high failure rate for their Xbox 360 console is because of a cost saving move to keep third-party ASIC (application-specific integrated circuit) vendors out of its graphics hardware.
By designing the graphics chip themselves they hoped to save tens of millions of dollars, but things backfired and the chips had an overheating problem that ended up costing Microsoft more than $1 billion for it’s Xbox 360 recall.
To help with the problem Microsoft ended up going with an ASIC anyway to redesign the graphics hardware and reduce it’s heat generation. Who it was isn’t known for sure but there’s a good chance it was ATI.
Since Microsoft hasn’t officially come out with this info it’s still just speculation, but there’s a really, really high chance that it’s right.