ATI announced via press release that their H.264 decoder has been chosen for the technology to drive Microsoft’s HD DVD add on for the Xbox 360. The decoder will apparently be built around ATI’s Avivo technology, built into many of their current Radeon graphics cards. The move makes sense, given that the Xbox 360 is built around ATI technology; the decoder will utilize the Xbox 360 GPU to do its magic. ATI’s familiarity with the core technology makes them the ideal developer for this task. Still left in the air is the pricing and availability for the HD DVD unit. Leveraging the existing GPU in the Xbox 360 will help keep the price down, and November is probably the best guess for the drive’s release in the US.

Full Press Release after the jump.

ATI’s H.264 decoder brings sharper, more true-to-life high-definition content to homes everywhere
MARKHAM, ONTARIO—(CCNMatthews - July 12, 2006) - ATI Technologies (TSX:ATY)(NASDAQ:ATYT) today announced that Microsoft Corp. has chosen ATI’s H.264 decoder for the Xbox 360TM HD DVD player, bringing users sharper, more true-to-life visuals and smoother playback of high-definition content. HD DVDs encoded using one of three approved codecs deliver up to six times the resolution of traditional DVDs all on a single disc. Built on ATI’s AvivoTM technology, the decoder used for the Xbox 360 HD DVD player brings to bear ATI’s considerable multimedia know-how to ensure gamers, home theatre buffs, and casual viewers alike get a more perfect picture from the H.264 format.

“The Xbox 360 gives consumers access to a world of high-definition games and video content through Xbox Live Marketplace. With the new Xbox 360 HD DVD player using ATI’s decoder technology, we’re giving consumers the choice to playback the latest in high-definition movies,” said Todd Holmdahl, corporate vice president of Xbox 360 hardware development. “HD DVD brings new meaning to the term home theater. When people see the visual clarity and realism that Microsoft and ATI are delivering through the Xbox 360 this holiday, they will be blown away.”

To enable the smoothest H.264 video playback possible, the ATI decoder technology makes use of the Xbox 360’s graphics processing unit (GPU) to accelerate video processing. The unified shader design of the GPU enables high-end processing techniques such as comb filtering and automatic gain control to ensure that video artifacts such as blockiness or color bands don’t disrupt playback.

“With the Xbox 360 HD DVD player, Microsoft and ATI are pushing the boundaries of high-definition multimedia content,” said Rick Bergman, senior vice president and general manager, PC Business Unit, ATI. “The decoder technology used in the new drive provides high fidelity visuals unlike anything ever seen before. This is another example of the close cooperation between our two companies, and the commitment we both share to delivering the most immersive experience possible for audiences around the world.”

For more information about ATI’s decoder technology, please visit http://www.ati.com/technology/avivo. For more information about Microsoft’s new HD DVD player for the Xbox360 please visit http://www.xbox.com/hddvd.

About ATI Technologies

ATI Technologies Inc. is a world leader in the design and manufacture of innovative 3D graphics, PC platform technologies and digital media silicon solutions. An industry pioneer since 1985, ATI is the world’s foremost graphics processor unit (GPU) provider and is dedicated to deliver leading-edge performance solutions for the full range of PC and Mac desktop and notebook platforms, workstation, set-top and digital television, game console and handheld device markets. With fiscal 2005 revenues of US $2.22 billion, ATI has more than 3,700 employees in the Americas, Europe and Asia. ATI common shares trade on NASDAQ (ATYT) and the Toronto Stock Exchange (ATY).

Important Information Regarding Forward-looking Statements

Certain statements in this news release, including but not limited to the features and performance of ATI’s H.264 decoder technology, and the quality of visual experience for home users may be considered “forward-looking”. Such forward-looking statements are based on current expectations, and, accordingly, entail various risks and uncertainties. Risks that could cause actual results to differ materially from such forward-looking statements include customer acceptance and demand for high-definition media content, potential software or hardware-related issues or conflicts, the development of new products or technologies and other unforeseen risks. We therefore cannot provide any assurance that such forward-looking statements will materialize. We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason. Additional information concerning risks and uncertainties affecting our business and other factors that could cause actual results to differ materially from any forward-looking statement is contained in our filings with Canadian and U.S. securities regulatory authorities, including our 2005 Annual Information Form and 2005 Annual Report filed on SEDAR at www.sedar.com. Our Form 40-F and other filings we make with the U.S. Securities and Exchange Commission are available on EDGAR at www.sec.gov.

Copyright 2006 ATI Technologies Inc. All rights reserved. ATI and ATI product and product feature names are trademarks and/or registered trademarks of ATI Technologies Inc. All other company and product names are trademarks and/or registered trademarks of their respective owners. Features, pricing, availability and specifications are subject to change without notice.

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