According to a Mercury News report, Microsoft will switch to a 65-nanometer production process, meaning new consoles will feature smaller microprocessors and graphics chips as opposed to the 90-nanometer processors found in current models.

The smaller, more cost-efficient 360 innards will add a range of benefits to the system, while lower production costs would also facilitate any plans for a future price drop.

If these new production methods are implemented, overall console reliability would be increased. The risk of overheating, an issue that has strongly been linked to the three red lights of death failure, would also be reduced, while more space would be freed up inside the console itself. The report speculates that this new space could be used to house the current brick of a power supply that comes with 360s.