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Engines roll for Xbox chip order

Small chipmaker Focus Enhancements says it is ready to begin supplying video chips for Microsoft's Xbox game console.

Focus Enhancements, a small chipmaker specializing in video-related products, has received its first order from Microsoft to supply chips for the Xbox video game console.

Focus signed a deal with Microsoft last year to become a supplier of TV-encoding processors, which convert PC code into signals suitable for display on a TV set. The Campbell, Calif.-based company joined larger Conexant Systems as one of two providers of the chips, a critical but relatively inexpensive and low-profile part of the Xbox.

The move is one of several cost-cutting measures Microsoft has taken to trim production costs for the heavily subsidized Xbox, including shifting production to China for units sold outside North America.

Microsoft last week announced that it was trimming the price of the Xbox by $20, despite fresh evidence that the loss-making division that produces the console was taking a heavy hit on company profits.

Focus said Tuesday it has received an initial production order from Microsoft for its FS454 chip and expects to begin shipping the chips in the third quarter of this year.

Early this year, Focus announced that initial orders from Microsoft had been delayed, raising doubts about whether Microsoft would meet sales forecasts for the Xbox.