The Xbox 360 takes a new approach to hardware compared to its predecessor. The CPU, named Xenon-CPU (or XCPU) at Microsoft and "Waternoose" at IBM, is a custom triple-core PowerPC-based design by IBM.
The Xbox CPU also contains ROM storing Microsoft private encrypted keys, used to decrypt game data.
While the first Xbox's graphics processing unit was produced by NVIDIA, the Xbox 360 uses a chip designed by ATI called Xenos.
Xenos contains 48 unified shader units, which are capable of both vertex and pixel shading operations. This is in contrast to older graphics processor designs which utilize separate specialized units for these tasks.