The following two stories have been reported at Gamespot.

Microsoft has changed the internal configuration of the Xbox, a move intended to thwart hackers and lower manufacturing costs.

Word of the changes began spreading on sites devoted to Xbox hacking, with some buyers of recently manufactured Xbox units complaining that mod chips designed for the original console won't work now. Microsoft Xbox spokeswoman Molly O'Donnell confirmed that the company has made minor changes to the console's configuration as part of ongoing efforts to "increase security and reduce overall costs."
O'Donnell declined to specify the specific changes but said they include measures intended to boost security. "They [Microsoft's Xbox hardware team] know the hacker stuff that's out there, and they're always trying to increase security," she said.

Contract manufacturer Flextronics' Xbox assembly plant in China has switched to the new configuration, and the Guadalajara, Mexico, plant that supplies Xbox units for North American consumption will make the change soon, O'Donnell said.

The newly configured units were first spotted in Australia, where Xbox hackers spotted slight changes to the main circuit board that likely will make it impossible to use current "mod chips"--add-ons that bypass security measures built into the hardware.

Hackers have embraced mod chips as a vehicle for running custom software, legally and illegally copied game discs, and imported games. Microsoft has tried several tactics to discourage such hacks.

The new configuration reportedly also uses a different type of BIOS, the basic software that controls the console's operation, and eliminates the fan that had been used to cool the console's custom Nvidia graphics processor.

An Australian hobbyist posting on an Xbox hacker site said he tried all currently available mod chips on the new Xbox configuration and none worked.

Microsoft appears to have shut down Lik Sang, one of the world's largest distributors of "mod chips"--gray-market add-ons that allow Microsoft's Xbox and other video game consoles to play pirated games.

A representative in Microsoft's Australian subsidiary confirmed that the company has taken legal action against Hong Kong-based Lik Sang. Lik Sang's Web site has been offline for nearly two weeks, with a notice on the site blaming a server outage. Lik Sang representatives could not be reached for comment, and Microsoft attorneys were unavailable to explain the exact nature of the legal action.
Lik Sang was one of the top worldwide retailers of mod chips, devices that, once soldered to a game console's main circuit board, disable security components. The chips typically allow a game machine to play legally and illegally copied discs, run unauthorized software, and play game discs intended for other geographic regions.

Hackers have latched on to mod chips as a conduit for running homemade software on the Xbox, leading to development of programs such as an Xbox version of the Linux operating system.

Lik Sang offered a variety of mod chips for the Xbox and Sony's PlayStation 2, along with game consoles with mod chips already installed by Lik Sang technicians. The company went into the manufacturing side of the mod chip business last August when it acquired OpenXbox, a mod chip design intended to allow upgrades.

Though mod chips have bothered the video game business for years, Microsoft has been particularly zealous in fighting them. The company reconfigured the Xbox's innards partly to deter hackers and has sought to hire a mod chip expert.