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Nintendo: Artx in, SGI chips out

Artx scores a dual victory as Nintendo says it will use the company's chips in new game units and SGI drops a lawsuit.

Upstart processor vendor Artx scored a dual victory today when it was confirmed that Nintendo has chosen to use the company's products in its new generation of Nintendo 64 game units and that Silicon Graphics has dropped its lawsuit against the company.

The product alliance and dismissal come as twin setbacks for SGI's MIPS subsidiary, which had formerly supplied chips to Nintendo.

As previously reported by NEWS.COM, Nintendo has been looking to replace MIPS as its chief source of microprocessors 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 has subsequently announced it will spin off MIPS into a separate company.

Artx, founded by former SGI employees who worked on the Nintendo project, had been considered a lead candidate to replace MIPS, sources said earlier. News of the alliances came from sources close to the chipmaker.

SGI dismissed its suit without prejudice. No admission of fault was made by any party, and Artx attorneys stated that no payment was made to SGI. Claims against Artx chief executive Wei Yen and the company's technology guru, Tim Van Hook, were also dismissed. Yen, who founded Artx in September, is a former SGI senior vice president who guided the company's Nintendo operation. Van Hook, also a former SGI employee, was a key architect for the Nintendo 64 platform.

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.