It seems now that recent speculation that the new main System on a Chip (SoC) for the Next Xbox (or Xbox 720, if you like) began production is apparently accurate; the SoC did indeed start production in late December of 2011. Sources tell us that the code name for the chip is Oban, and it is being produced by both IBM and Global Foundries for Microsoft.

If speculation is correct, which our sources believe it is, the power behind the next Xbox will be a PowerPC CPU that is married to an ATI Southern Islands GPU, or modified 7000 series. Continued rumors of an x86 compatible CPU seem to be bunk, just based on where the chip is being fab’d.

This first run of these 32nm Oban chips will be destined for developer consoles, so any hope for a holiday console release in 2012 seems unrealistic, according to our sources, but an announcement perhaps before the end of the year might be possible. It would seem Microsoft’s strategy of getting it in 2013 is all but assured. We do think that the chips will be in production by the end of the year for consoles destined to be sold in 2013, which seems to agree with what others are saying.

There are still many unknowns, but those in the development community seem to be clued in at least a high level. From the shadows we hear whispers of expecting development kits as early as March, but more than likely April, if all goes well.

While we expect these development kits to shed some light on what Microsoft will be doing with the Next Xbox/720, it is very likely that we will see at least couple of revisions before everything is settled as they get closer to an actual production unit.

Charlie seems to be hearing close to the same thing right here.