I think their official answer at that time was, that AGP Texturing was completely unusable when it was introduced.
First, the initial loads of AGP Motherboards had enough Problems running stable at 66MHz, and then there was no Game in sight that would exceed the generous 16MB of a Banshee or a Voodoo3, for example...
The competing Cards such as the RivaTNT or TNT2, did as well show that AGP Texturing was bollox back then (since the TNT2 even had 32MB local Video Memory).
So I guess they were certain to stay ahead of the Gaming Industry by adding more local Video Memory to their Cards...
They also cannot possibly have forseen, just for
how long their cards would end up being in service (!)
Nowadays, those 16 or 32MB are tiny compared to the 128MB Behemoth's from NVidia or ATI, but only because they are simply old, and weren't designed to run latest Games under DirectX9 in the year 2003
If they were still in business, I'm sure the successor of the much delayed Voodoo4 and Voodoo5 cards would have finally fully supported AGP Texturing.