We still haven't gotten 65nm Xbox 360 processors, and there's already talk of Microsoft's contracted Singaporean chip manufacturer moving on to designing 45nm CPUs for gaming devices. Why is this important? Because the smaller the CPU fabrication size is (90nm vs 65nm vs 45nm), the less power it takes to run and the less heat it generates (theoretically).
The same Singaporean chip manufacturer, Chartered Semiconductor Manufacturing, has been making 65nm chips for two quarters now. This probably means Xbox 360s will go 65nm fairly soon, but will have to wait about 18 months or so to get to the 45nm threshold. Will it actually make a difference? From what we heard, most of the overheating problems came from the GPU, not the CPU, which is what lead to the added cooling in the Elite version recently. [PCAdvisor]