Report: Xbox 360 Warranty Extension, Red Rings of Death Caused by Cost-cutting MS Design

Microsoft's $1 billion Xbox 360 warranty extension stemmed from internal modifications to produce a cheaper graphics chip, according to an analyst from tech consulting business Gartner.

Since announcing the extension, Microsoft has remained rather quiet as to what exactly caused the "unacceptable" number of Xbox 360 breakdowns. It was an issue with a "Microsoft-initiated design," Entertainment Division president Robbie Bach noted.

"Microsoft wanted to avoid an [Application-Specific Integrated Circuit] vendor," chief Gartner analyst and research VP Bryan Lewis claimed during the Design Automation Conference, which was covered by EETimes.

He proposed that Microsoft took its take on the ATI-designed graphics chip directly to Taiwan Semiconductor Manufacturing Co., resulting in a cheaper chip that reportedly produced too much heat and caused the fabled "Red Ring of Death."

After realizing the mistake, Lewis says Microsoft called in an unnamed vendor to help resolve the issue, which the outlet strongly believes to be ATI Technologies.