Thursday February 6, 6:30 AM EST
(recasts, adds background)
SANTA CLARA, Calif., Feb 6 (Reuters) - Graphics microchip maker Nvidia Corp. (NVDA) said on Thursday it has settled a dispute with Microsoft Corp. (MSFT) over the pricing of graphics, audio and networking chips for the Xbox video game system.
Nvidia, whose highest-profile customer is Microsoft, had previously said it could be forced to produce the chips at a loss if it lost the arbitration.
In addition to the agreement, which ends the arbitration, Nvidia said the two companies would work together on "future cost reductions" for the Xbox. Further details were not disclosed, but Nvidia said it provide more information during a conference call on Feb. 13.
Nvidia and Microsoft, the maker of the Xbox system, had been in arbitration over the prices Microsoft pays for the graphics chips it buys for the Xbox, and the volume in which those chips are produced.
Microsoft has been the highest-profile customer of Nvidia, whose fortunes have been closely linked in past to the Xbox's performance, though its Xbox chips have been a declining part of the company's overall revenue.
Nvidia's, revenue from Xbox products fell $40 million in its fiscal third quarter from the prior quarter, and the company in November said it expected fourth-quarter Xbox sales would be flat over third-quarter sales.
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