Microsoft has plans in the works for a new version of its Xbox 360. Slated for this August, the new console version will utilize the firm’s latest chipset codenamed Jasper. Taiwan Semiconductor Manufacturing Company (TSMC) and IBM have been signed on to make the new Jasper chipset for the game console. The new chip design will feature a 65nm design of the existing chip that uses ATI’s Xenos graphics and IBM’s Xenon CPU. The new design is said to require less power, have a more simplified cooling system, and most importantly produce less noise.

The current revision of the Xbox is based on the Falcon chipset that is equipped with 90nm northbridge and 65nm CPU. Many have pointed out the biggest problem for the Xbox 360 has been due to the big heat from the graphics chip. While heat was reduced in the current revision, Microsoft seeks to bring down the cost and heat even more by using smaller chips. The first generation Xbox used 90nm chips.

Jasper will likely carry a lower production cost compared to Falcon due to the smaller packaging. This may be good news come this holiday, as the lower cost may lead to Microsoft cutting prices. Last fall Microsoft launched Falcon along with a $50 price cut of the Xbox 360.

TSMC is also reported to be the manufacturer for the next generation chipset for the console in addition to its latest contract. The next chip, code-named Valhalla, is rumored to be a single hybrid chip combining the CPU and graphics core into a 65nm package. However, it appears Microsoft would have to disclose IBM’s CPU design processes to TSMC, something IBM may not be too pleased about. The second option would be for Microsoft to rework the CPU. Valhalla, is expected to ship in the fall of 2009.