According to Fudo over at Fudzilla, AMD has already snapped up the deal for designing the GPU is the next-generation Xbox.

The current Xbox 360 is powered by ATI’s Xenos GPU, which is based on R580 (X1900), which some characteristics of R600 (HD 2900), such as the unified shaders. Despite releasing a full year earlier, Microsoft are happy with the fact that the Xenos is more powerful than PS3’s RSX GPU based on Nvidia NV47 (Geforce 7800).

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According to Fudo over at Fudzilla, AMD has already snapped up the deal
for designing the GPU is the next-generation Xbox.

The current
Xbox 360 is powered by ATI’s Xenos GPU, which is based on R580 (X1900),
which some characteristics of R600 (HD 2900), such as the unified
shaders. Despite releasing a full year earlier, Microsoft are happy with
the fact that the Xenos is more powerful than PS3’s RSX GPU based on
Nvidia NV47 (Geforce 7800). Originally in 90nm, the Xenos GPUs are currently manufactured on a 65nm TSMC process.

The next-gen of consoles has long been rumoured to hit stores in 2010, but the latest rumours suggest 2012. This is well into the future, and at least one generation if not two ahead, in terms of desktop graphics. This could very well mean a 22nm DX12-based GPU, or at least a 28nm DX11 GPU. We hope Microsoft have learned from their mistakes and will work closely with ATI on the fabrication and thermals to avoid any overheating issues akin to the RROD fiasco with the Xbox 360. 

Till the next-gen Xbox is ready, Microsoft will look to keep the consumers happy with Natal, which comes in 2010. Sadly, this console generation continues to be severely underpowered when compared to its PC counterparts, and this is holding back PC games as well. 2012 means another 2-3 years before we finally start seeing a new revolution in gaming technology.

Reference: Fudzilla