ATI Begin To Roll Out The R500 For Xbox 2

It has been revealed today that ATI is now starting to roll out the R500 part which will be the basis of Xbox 2. The R500 is a Shader Model 3.0 part, and will be similar to the R520 part that will be its next generation PC graphics chip. This will be a relief to developers, who have been working on the 9800 class hardware that shipped in the Xbox 2 development kits.

The Xbox 2 deal that Microsoft has with ATI is very different from the one it put in place with Nvidia for the original machine. Microsoft pays Nvidia a flat rate for each chip it supplies for the Xbox, a figure which has stayed unchanged since the machines launch. As chip manufacturing prices have come down, this has enabled Nvidia to rake the cash in as it makes a huge profit on each chip. Realising its mistake, Microsoft is fabricating its Xbox 2 graphics chips itself, and just paying a license fee to ATI for the chip design – a far less lucrative deal.