Development of ATIs new chip, R520, is coming along nicely and the information on the new design is beginning to make its way to "sources" everywhere. The new chip, expected in 2005 will definitely feature Shader Model 3.0, although Shader 4.0 is almost definitely out of the planning since Microsoft is expected to hold it back until the Longhorn release, sometime in 2006.
If we are to believe previous ATI claims that the time wasn't right in 2004 for SM 3.0, the decision to support it with the R520 indicates that 2005 is considered to be the right time. Strangely enough, ATIs choice to include Shader Model 3.0 in the new boards stands to benefit the most out of upcoming games developed with the support of nVidia. That sounds like the cheapest time but may prove to be a very shrewd use of the competitor's investment.
Most ATI fans, or executives, are expecting a lot out of the R520 design, since the team behind it is the same group that created the R300 (Radeon 9700) which is in great part responsible for the ATI success story of two years ago.
Expect a lot more information to leak as we leave summer behind and enter the much busier fall.