ATi to supply graphics chip for Xbox 2

After a long period of speculation and rurmors Microsoft has confirmed that it is to change the supplier for it graphics subsystem on the Xbox 2 to ATi. Nvidia supplies the chip set for the current Xbox.

The base cost of the Xbox has been something of a concern to Microsoft and they have been keen to drive the price down to reduce the amount of money they lose on each one. Many in the industry feel that Microsoft wanted Nvidia to drop their previously agreed unit price for the current Xbox graphics chips and Nvidia declined. Nvidia recently reported a hike in profits that they attributed to the Xbox deal.

The official Microsoft quote was, “We’re combining Microsoft’s vision, software experience and R&D resources with ATI’s pioneering leadership in graphics technologies to create innovative future Xbox products and services that meet the lifestyle needs of consumers in the Digital Decade,” said Robbie Bach, senior vice president of the Home and Entertainment Division at Microsoft. “We selected ATI after reviewing the top graphics technologies in development and determining that ATI’s technical vision fits perfectly with the future direction of Xbox.”