The NY Times reports that Microsoft is ending its partnership with IBM to found it's own chip design lab to work on chips for a planned third generation Xbox:

The design effort will initially be split between research labs at the company's headquarters in Redmond, Wash., and its Silicon Valley campus here. Tentatively named the Computer Architecture Group, the project underscores sweeping changes in the industry.

One reason for the effort is that Microsoft needs to begin thinking about the next-generation design of its Xbox game console, said Charles P. Thacker, a veteran engineer and Microsoft engineer who will head the Silicon Valley group. Voice recognition may also be an area where the research could play a significant role.

Thacker is famous in certain circles for his work at the Xerox Palo Alto Research Center. The division will be called the "Comupter Architecture Group" which isn't the snazziest name ever, but then, neither was IBM.

This article was originally published on Joystiq.