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AMD buys ATI

23 August 2006 News

AMD sent shockwaves through the industry recently with the announcement that it is acquiring ATI, the maker of graphics processor units (GPUs) and core-logic chipsets, for $5,4 bn.

According to AMD, the acquisition will allow AMD to better support the stable platform requirements of enterprise customers while providing a competitive core-logic chipset with integrated graphics for the mobile and business segments. With no such core-logic solution available from ATI today, and no low-power processor architecture available from AMD until at least 2007, the deal is unlikely to produce any short-term gain, but will aid AMD in the platform battle that is emerging as Intel continues to push for more semiconductors within the PC.

Besides AMD and Intel, the announcement has much wider ramifications for a variety of vendors ranging from ATI competitor Nvidia, to PC OEMs, and even to foundry player TSMC. Nvidia is now the only remaining independent high-end GPU provider. Although Intel is sure to push high-end solutions toward Nvidia over its former partner ATI, Intel is still advancing its own graphics technology, which could result in an immediate gain for AMD being short lived.

PC OEMs, who are already caught in a battle for the processors, are now in the crossfire again with the core-logic chipsets, especially if they have designs that support Intel processors with ATI GPUs. And even TSMC has to be wondering about the possible ramifications of the deal. ATI is currently one of TSMC's largest customers, but AMD has a growing relationship with Chartered Semiconductor, which is also part of the Common Platform manufacturing group with IBM and Samsung.

For more information, In-Stat has a new report called 'The Deal of the Year: AMD Acquires ATI'. Contact Erin McKeighan, emckeighan@reedbusiness.com





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