Intel's Atom has never been a strong performer in the graphics area. That apparent weakness in the modest but power-conscious CPU led the way for Nvidia to step in with its Ion chipset.
For the next generation Atom, Cedarview, Intel is reportedly turning to PowerVR for its graphics technology. While PowerVR hasn't been in the commercial desktop graphics space for the last decade, the company has been thriving well by pushing its graphics in the ARM market. PowerVR provides graphics technologies for the smartphone and tablet processors for Apple, Samsung, among others.
According to a slide obtained by VR-Zone, it looks like PowerVR will be doing the graphics for Cedarview. Specifically, it will be the PowerVR SGX545, which is a faster version of the SGX543 that ships with the iPad 2 today.
VR-Zone reports that Intel has worked with PowerVR's SGX535 with the GMA 500/600, and that this new SGX545 chip will support DirectX 10.1 and OpenGL 3.0 as well as hardware accelerated video decoding for MPEG-2, MPEG-4 part 2, VC1, WMV9 and H.264.