An arbitration panel set up to resolve the dispute between Microsoft and Nvidia over the pricing of Xbox graphics chipsets has ruled that Nvidia must continue to supply Microsoft with the chipsets until it resolves the matter.
In its latest SEC filing Nvidia says The arbitration panel has issued an interim ruling that the Company must supply Microsoft’s reasonable requirements of chipsets, but no minimum or maximum amount has been set overall or for any particular period. Microsoft has also asked for damages for alleged violations of the agreement and requested that the arbitration panel reduce chipset prices paid by Microsoft.
The Company has also requested pricing relief regarding the Company’s chipsets and asserted claims for damages. The arbitration panel will consider all these claims during the arbitration. For sales of the Xbox processors, the Company has deferred revenue in an amount equal to the difference between the price being paid by Microsoft and the price Microsoft claims it should be paying. The Company expects that it will continue to defer revenue related to the disputed pricing and volume discount for future sales of these processors until final resolution of the matter. This amount was approximately $46.2 million as of July 28, 2002. The arbitration is being conducted in New York by a panel under the rules of the American Arbitration Association. The Company expects to conclude the arbitration before June 30, 2003.