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Originally Posted by Wingless
Las, I heard that the PS2 plays PSX games because they literally stuck the PSone circuits, chips, etc. into the PS2.
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This is essentially correct. The PS2 was able to emulate PS1 games, but some of the older hardware wouldn't work with the newer technology. They just rammed in some of the older hardware into the PS2. It wasn't a fullblown PS1, however...just the modifications needed to allow perfect backwards compatibility.
-Lasereth