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Artx ousting MIPS from Nintendo

Under the terms of a new alliance, Nintendo will adopt the upcoming graphics processor from Artx in its next generation of game units.

Upstart processor designer Artx has ousted MIPS, the chip subsidiary Silicon Graphics, as the silicon provider and chief technology partner of gamemaker Nintendo, but the threat of lawsuits may keep SGI in the mix.

Under the terms of a new alliance, Nintendo will adopt the upcoming graphics processor from Artx in its next generation of game units, said Tim Van Hook, chief technical officer of Artx. Artx will also work with Nintendo to select a microprocessor vendor for units and act as a technology partner, he added.

The deal will likely lessen what has been a valuable revenue stream for SGI and MIPS, which currently supply the graphics processors and microprocessors for Nintendo's game units. The deal means that Nintendo, which is one of MIPS' biggest customers, will not be using SGI's Reality co-processor in its game units.

There is, however, a strong possibility that MIPS will remain the microprocessor of choice for Nintendo. Yesterday, SGI suspended a patent infringement lawsuit against Artx, Hook, and Artx chief executive Wei Yen so that the companies can negotiate "business and licensing" solutions, said Constance Sweeney, an SGI spokeswoman.

Yen, Hook, and other Artx employees came from SGI. The suit alleges that the company misappropriated trade secrets from SGI. SGI has dismissed its suit against these parties "without prejudice", a legal term which means that SGI can reactivate the suit within certain time constraints if the negotiations prove fruitless.

Nintendo has yet to select a microprocessor vendor, but Hook said that MIPS will likely be one of the candidates.

"We're down to four to five viable microprocessor candidates. One of the candidates is the MIPS processor," he said. "SGI, Nintendo, Artx, and MIPS may continue to have a business relationship."

As previously reported by NEWS.COM, Nintendo has been looking to replace MIPS as its chief source of microprocessors and graphics technology for game units since last year, when former SGI CEO Ed McCracken stepped down. Nintendo was nervous about SGI's commitment to low-end 64-bit processors; SGI subsequently announced it will spin off MIPS into a separate company.

Royalties from Nintendo 64's hardware and software sales make up a sizable portion of the MIPS Group revenue, contributing about $45 million annually, according to former employees. One source noted that Nintendo royalties will remain "quite healthy" for the next three to four years. But once the next version of the Nintendo video game console is released, royalties from the Nintendo 64 will decline.

Jim Turley, senior editor of the Microprocessor Report, noted earlier that chips bought by Nintendo and Sony's PlayStation represent about 66 to 75 percent of units shipped by the MIPS Group.