The announcement ends speculation that the company had wrested the Xbox gig from its arch-rival, Nvidia.
"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," said Robbie Bach, senior VP of the Home and Entertainment Division at Microsoft, in the official statement.
However, it's widely believed that Microsoft and Nvidia simply couldn't reach an agreement over the direction the project would take.
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