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Looking to further reduce the chances of overheating while bringing down production costs as well, Microsoft reportedly plans to release a new version its Xbox 360 video game system code-named Jasper in August. The new design will feature a shrunken 65nm ATI graphics core to go along with IBM’s 65nm Xenon CPU that was introduced with the Falcon refresh.

The new design is said to require less power, have a more simplified cooling system, and most importantly produce less noise. Reports point at Taiwan Semiconductor Manufacturing Company, Advanced Semiconductor Engineering, and Nanya as being signed on the project. TSMC will produce the 65nm chips, ASE will package and test them, and Nanya will supply the flip-chip packaging substrates. Next up in the 360’s chip process evolution is “Valhalla,” which will reportedly combine the CPU and GPU into a new super-efficient chip for fall of 2009.