Microsoft to Use IBM’s Chip in Xbox Console

Microsoft Corp. will license computer chip technology from IBM Corp. for use in the Xbox video-game machine.

IBM is replacing Intel Corp. as the microprocessor supplier in future versions of Microsoft’s Xbox, said a spokesman for Armonk, N.Y.-based IBM.

Terms of the deal weren’t disclosed.

Winning the Xbox work will boost IBM’s chip making business, which had losses of $218 million in the first three quarters of this year and more than $1 billion last year, analysts said.

Shares of Microsoft rose 54 cents to $26.68, and Intel gained $1.09 to $34.04, both on Nasdaq. IBM rose 20 cents to $89.68 on the NYSE.