Microsoft has confirmed that they will be using the Nvidia Tegra chip inside its upcoming Zune HD portable media player.

Nvidia’s Tegra is a system-on-chip processor architecture which is derived from the ARM family and is built for mobile devices such as smartphones, PDAs and MIDs. It is built on the Nvidia GeForce technology and enables intuitive user interfaces and access to online interactivity.

Matt Akers, software development engineer in test at Microsoft, said in a podcast: There’s been a lot of chatter about us possibly putting the Nvidia Tegra chip in the Zune HD. Well, we’re going to go ahead and confirm that. Yes, the Zune HD does have the Tegra chip in it.

Zune HD would come with HD radio receiver, HD video output capabilities, organic light-emitting diode (OLED) touch screen, Wi-Fi and an internet browser.

Microsoft also plans to extend its video service to Xbox Live internationally this fall.