basically to cool chips down you have heat sinks, they're there to pull the heat up and radiate it out... they don't do anything else tho, other than pulling the heat up off the board
to make them effective you have to cool them down - thus cooling down the chip by replacing hot air with cold air
in your average PC, the heat sink has a fan directly attached to it which does much of the work of replacing hot air with cold air
in the 360 there are no fans on the heat sinks, meaning the hot air just sits there getting hotter, instead they placed 2 fans at the rear of the console acting like a "vacuum"... problem is the way the console is designed to vent air out and have intake holes, there's not really much pressure to draw the hot air away

later on, they added this piece of plastic to try and suck the hot air out

you also notice the dvd drive sits right on top of the CPU, reducing air flow and causing more heat problems when the dvd drive spins up
the other problem if you notice? no intake fans, in order to replace hot air with cold air you need a source for the cold air, which without an intake fan the efficiency is horrible if you're simply relying on the surrounding air to cool the chips down... essentially more than likely, your 360 is using hot air to cool down your hot chips, and due to the tight restrictions on the internal space said intake is even made worse
suffice to say... it's one of those mechanical problems where lots of people can have issues while others have none, it's not a 100% fail all the time kind of deal like some people say, but it's definitely error-prone
Microsoft's solution since the RROD first cropped up was to downsize the chip, ie: launch 360's had a 90nm chip which gets very hot... current 360's have a 45nm chip which doesn't get nearly as hot, hence the issue of not having enough air flow isn't as big of a deal
all of this leads to this possible slim board:

there's no longer a chip under the dvd drive, instead both chips are right next to eachother, the heat sink is located near the edge of the console, meaning less restrictions on air flow, and finally a fan on the heat sink, meaning the console will replace hot air with cool air very efficiently... finally the chips themselves are 32nm, meaning they produce very little heat
all in all, if that's the real board then they'll likely have finally fixed the RROD completely

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