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DMeisterJ said:
Wonder how they're going to do that since they lack the chips necessary to do so.

All they need to do is figure out how to emulate the GS. Last gen, ps1 BC was done completely via hardware at first, but by the time the slimline ps2 hit, they had figured out how to do it completely via software (and that was carried over to the ps3).  It was only a matter of time before they got ps2 BC working completely from software.