M$oft didn't choose either nVidia nor ATI for X-Box

http://news.com.com/2100-1043-5102081.html

an exerpt

[...]" "We're integrating SIS' cutting-edge, media I/O technologies into
future products to create innovative Xbox products and services that serve
the digital entertainment lifestyle." Todd Holmdahl, general manager of Xbox
hardware, said in a statement.

Changing partners comes with advantages and risks, said Kevin Krewell,
senior editor of The Microprocessor Report. On one hand, Microsoft will get
access to a broad new portfolio of intellectual property it can use to
fashion customized chips for its console.

Switching partners can also clear away some of the bad feelings that arose
in regard to the first Xbox. For Intel, supplying 733-MHz Pentium IIIs to
Microsoft had become a low-margin business, Krewell said. Nvidia and
Microsoft, meanwhile, went to arbitration over their contract. At the time,
Nvidia was afraid that it would get stuck with unusable chips or have to
sell parts at a loss. " [...]