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Nvidia to work on PlayStation 3 chip

Graphics chip leader will team with Sony on upcoming video game console.

Graphics chip leader Nvidia announced Tuesday that it is working with Sony to develop the graphics processor for the next version of Sony's PlayStation video game console.

The companies revealed in a joint statement that they have been working together for the past two years to develop a graphics processor based on Sony technology and Nvidia's GeForce architecture for PC graphics processors. The deal will include a royalty structure for Nvidia and will encompass other Sony consumer electronics products, the companies said. Further financial details were not disclosed.

The agreement will keep Nvidia in the console video game business after a mixed experience in supplying the graphics processor for Microsoft's Xbox. While Xbox business has been a major contributor to Nvidia's revenue in the past few years, the partnership has been marred by inventory problems that required the use of outside arbitrators to renegotiate pricing.

As a result, industry observers weren't surprised when Microsoft announced last year that it had selected Nvidia rival ATI Technologies to create the graphics processor for the next version of the Xbox, expected to hit the market late next year.

Sony has slowly revealed details over the past few years on its plans for the PlayStation 3, which the company plans to preview at the Electronic Entertainment Expo trade show next May.

The exact role the graphics processor will play in the PlayStation 3 is unclear, as the console will be powered by the Cell processor, which is being jointly developed by Sony, IBM and Toshiba. The Cell will include numerous functions optimized for rendering complex computer graphics, meaning that the graphics processor could play more of a secondary role than current consoles do.

"We are thrilled to partner with Sony Computer Entertainment to build what will certainly be one of the most important computer entertainment and digital-media platforms of the 21st century," Nvidia CEO Jen-Hsun Huang said in the statement. "The combination of the revolutionary Cell processor and Nvidia's graphics technologies will enable the creation of breathtaking imagery that will surprise and captivate consumers."

Besides partnering on chip design, the companies will work together to create middleware and other development tools to enable game creators to harness the new chips, according to the statement. Nvidia has made middleware an increasing focus of its PC graphics business, as it has added new programming capabilities to its chips.