According to The Register, Microsoft are shortly (August) beginning production of an update to the X360 that, they hope, will resolve the ongoing red-ring-of-death problems.
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The Register said:The original 360 has a 90nm GPU and a 90nm CPU. Last year, console based on the 'Falcon' platform incorporated the 65nm CPU. With the debut of Jasper and its 65nm GPU, the over-heating problems - manifested most clearly in the infamous Red Ring of Death - that have plagued no small number of Xbox 360 owners will evaporate.
(Source)