[Lateralus]

PHILADELPHIA (Reuters) -- -- Advanced Micro Devices, the No. 2 supplier of computer processors, is close to a deal to buy graphics chip maker ATI for $5.5 billion, a source familiar with the situation said on Friday.

Any such deal would shake up the processor industry, which is witnessing a battle over market share between AMD and larger rival Intel (Charts).

ATI (Charts) is one of two major graphics chips makers, along with rival Nvidia (Charts), and is a big supplier of chipsets - the cluster of secondary chips and interfaces that surround a computer's processor - to both AMD and Intel.

Unless talks break down, a deal could be announced as early as Monday, the source said.

Rumors of this had started circulating back in May but were widely dismissed.

It's certainly interesting considering that over the past few years, the strategic alliances of CPU-GPU seemed to form as ATI/Intel and nVidia/AMD. But so long as this works for the benefit of both AMD and ATI, I'm totally for it.

[goMac]

I hope this doesn't mean bad things for my new Intel Crossfire board.

[Jeff Lebowski]

Originally Posted by goMac

I hope this doesn't mean bad things for my new Intel Crossfire board.

This will be better because then AMD can dictate the way ATI makes their architecture, making for better integration and less bottlenecks. It'll also make it hard for people to go AMD + nVidia.

[greenamp]

If this proves to be true, AMD would be stupid to alter ATIs business model to favor their own chips. Such a move would almost certainly force Intel and nVidia to shack up, which could really backfire on AMD in the long run.

Think of it this way. If currently ATI cards ran better with AMD chips, whereas nVidia cards ran better with Intel chips, which pair would be selling more? With all the CoreDuo, Woodcrest, etc buzz Intel is basking in right now, the Intel/nVidia pair would dominate, cutting sales of both AMD and ATI products.

[ghporter]

I don' t think it'll hurt nVidia; they make their OWN AMD-based motherboards. But concentrating on one video platform will help AMD ensure better performance in certain configurations.

[goMac]

Originally Posted by Jeff Lebowski

This will be better because then AMD can dictate the way ATI makes their architecture, making for better integration and less bottlenecks. It'll also make it hard for people to go AMD + nVidia.

Which is simply wonderful for AMD people, but I'm in the Intel camp. I may have just bought the last Intel Crossfire board ever made. If AMD/ATI drop support for Crossfire on Intel, I'll have a small problem.

[Jeff Lebowski]

Originally Posted by goMac

Which is simply wonderful for AMD people, but I'm in the Intel camp. I may have just bought the last Intel Crossfire board ever made. If AMD/ATI drop support for Crossfire on Intel, I'll have a small problem.

Well of course they won't drop support for the boards, they'll just stop making more.

[Eug Wanker]

Yeah, I've been watching my ATY increase on these rumours, but somehow the possibility of this arrangement makes me uncomfortable.

[angelmb]

Originally Posted by greenamp

(…)Think of it this way. If currently ATI cards ran better with AMD chips, whereas nVidia cards ran better with Intel chips(…)

How does this apply to Macs?, is there any 'feeling' that Macs are happier with ATI or nVidia GPUs… or maybe there is not such a difference?

[goMac]

Originally Posted by Jeff Lebowski

Well of course they won't drop support for the boards, they'll just stop making more.

Well, in theory they could drop Crossfire for some HyperTransport enabled Crossfire 2, and have Crossfire 2 require Crossfire 2 cards.

Not that I don't hope for your scenario.

[Lateralus]

Looks like it's a done deal.

[goMac]

Originally Posted by Lateralus

Looks like it's a done deal.

The downside is that Apple might loose ATI as their GPU vendor.

The upside is that Macs might get NForce chipsets instead.

[greenamp]

Why would AMD stop selling ATI chips&cards to Apple? Or to anyone for that matter?

This will effect nothing except that it's another product AMD sells.

[Eug Wanker]

Originally Posted by Lateralus

Looks like it's a done deal.

The link is dead. Here's another one though.

AMD announces $5.4-billion deal for ATI

Under terms approved unanimously by both companies' boards of directors, Sunnyvale-based AMD will pay $4.2-billion in cash and 57 million AMD shares to acquire all of ATI's outstanding stock, according to a news release.

Based on AMD's closing share price of $18.21 on Friday, the deal valued ATI's shares at $20.47, a premium of almost 24 per cent compared with ATI's Friday's closing price of $16.56 on the Nasdaq Stock Market. ATI shares surged more than 9 per cent to $18.07 in pre-market trading after the news.

It may be time for me to sell then. That's a Canadian share price of $23.50, and it closed at CAD$18.77. That's a 25% difference. I bought at much lower too.

P.S. I wonder what would happen if I didn't sell. When the deal goes through, it will be deleted from the TSX. Do they just transfer it over to the NASDAQ, or does the Toronto Stock Exchange just automatically sell it? Neither really make sense to me.

[shabbasuraj]

U.S. chip maker buys ATI
Jul. 24, 2006. 07:44 AM
CANADIAN PRESS AND ASSOCIATED PRESS

The world’s second-largest computer chip maker announced Monday it plans to acquire one of Canada’s technology jewels for $5.4 billion US in cash and stock, confirming last week’s rumours.
A marriage between Sunnyvale, Calif.-based Advanced Micro Devices and graphics specialist ATI Technologies Inc. of Markham could shift the balance of power in the chip industry in significant ways.

AMD’s product portfolio — which has remained limited to the microprocessors that act as a PC’s main calculating engine — would balloon overnight, as it folds in two major new chip categories.

“ATI shares our passion and complements our strengths: technology leadership and customer centric innovation,” AMD chairman and CEO Hector Ruiz said in announcing the deal.

“This combination means accelerated growth for ATI, and broader horizons for our employees,” said Dave Orton, CEO of ATI. "All of our product lines will benefit. Joining with AMD will enable us to innovate aggressively on the PC platform and continue to invest significantly in our consumer business to stay in front of our markets."

The new offerings would give AMD a more complete package of products as it takes on Intel, which has long supplied a wider portfolio that includes so-called chipsets that connect a microprocessor to a PC’s other core components and graphics chips that power images rendered by computer games and internet video.

ATI, which makes computer chipsets and graphics chips, also makes a host of semiconductors for such consumer products as high definition TVs and cellphones.

A deal is expected to put competitive pressure on Nvidia Corp., the other dominant maker of graphics chips. Santa Clara-based Nvidia has competed against Intel in selling chipsets and graphics chips while counting on AMD for sales of those products.

Under terms approved unanimously by both companies’ boards of directors, AMD will pay $4.2 billion US in cash and 57 million AMD shares to acquire all of ATI’s outstanding stock, according to a news release.

Based on AMD’s closing share price of $18.21 on Friday, the deal valued ATI’s shares at $20.47 US, a premium of almost 24 per cent compared with ATI’s Friday’s closing price of $16.56 on the Nasdaq Stock Market. ATI shares surged more than nine per cent to $18.07 in pre-market trading after the news.

On the Toronto stock market Friday, ATI shares were up 5.6 per cent at $18,77 Cdn on rumours of an AMD deal.

AMD, which has been shelling out billions to add factory capacity so it can better compete with Intel Corp., will pay for the acquisition with a $2.5 billion loan from Morgan Stanley to help fund the purchase.

AMD said it expects the deal to contribute “slightly” to earnings next year and add “meaningfully” to profit by 2008. The purchase will save the combined company about $75 million by the end of 2007.

[TETENAL]

Since Macs use Intel-processors exclusively, does that mean that ATI will stop selling their GPUs to Apple? It seems to me that AMD could use its increased market power to hurt Apple.

[Eug Wanker]

So, whaddya think? Sell ATY (at CAD$23.50) or not?

Originally Posted by TETENAL

Since Macs use Intel-processors exclusively, does that mean that ATI will stop selling their GPUs to Apple?

No.

[Eug Wanker]

As of 9:38 am:

ATY: CAD$22.18
ATYT: US$19.41

[goMac]

Originally Posted by greenamp

Why would AMD stop selling ATI chips&cards to Apple? Or to anyone for that matter?

This will effect nothing except that it's another product AMD sells.

AMD has already said they don't care about loosing Intel customers. I don't think it will be long before they start moving cards over to being "AMD optimized".

[shabbasuraj]

My buddy just got promoted due to the merger...at the expense of some newer employees...


....allegedly.

[Eug Wanker]

Originally Posted by Eug Wanker

As of 9:38 am:

ATY: CAD$22.18
ATYT: US$19.41

Goodbye ATY, it was nice knowin' ya.

(Sold at CAD$22.30, up 41% from my $15.85 purchase price last year.)

[greenamp]

Originally Posted by goMac

AMD has already said they don't care about loosing Intel customers. I don't think it will be long before they start moving cards over to being "AMD optimized".

That would be a very stupid business move on their part. Where did they say this?

I think the only thing we'll see majorly different from this buyout is AMD cpus with integrated graphics on the same chip.

[voodoo]

Originally Posted by angelmb

How does this apply to Macs?, is there any 'feeling' that Macs are happier with ATI or nVidia GPUs… or maybe there is not such a difference?

As long as it isn't an Intel GPU, most Macs should be happy. Not to mention the users

V

[TETENAL]

Originally Posted by voodoo

As long as it isn't an Intel GPU, most Macs should be happy. Not to mention the users

My Mac has an Intel GPU and I am very happy with my computer.

[goMac]

Originally Posted by greenamp

That would be a very stupid business move on their part. Where did they say this?

I think the only thing we'll see majorly different from this buyout is AMD cpus with integrated graphics on the same chip.

AMD has stated they want to combine the GPU and CPU into one component, or at least make the GPU built for a second processor socket on the motherboard. By nature, this would mean ATI GPU's would no longer with Intel boards. AMD stated somewhere that they are aware this will loose Intel customers. I can't find the site where they stated that, but it's out there.

On the good news front, AMD posted a thing on the merger, and they listed Apple, Nintendo, and Microsoft as customers of the new combined company, so looks like in the short run we'll still get AMD GPU's. ATI also posted in their FAQ on the merger that the name ATI will no longer be used in favor of AMD. Yay fro Intel Macbook Pros with AMD Radeons....

[Eug]

Nobody likes ATI anymore...

[Velocity211]

So is apple gonna switch to Nvidia graphic cards instead of ATI?

[exca1ibur]

Intel for sure will NOT be renewing their contract with ATi. This deal was approx $80-$100 Mill a year.

http://blogs.zdnet.com/Apple/index.php?p=248

Starting to look like we may as well get used to garbage integrated Intel video on all machines but the high end. Hopefully this will make Apple / nVidia do some more driver OpenGL work and maybe more third party card makers, but I highly doubt that will happen.

[driven]

This was the dumbest thing that ATI or AMD has ever done.

[Eug Wanker]

Originally Posted by exca1ibur

Intel for sure will NOT be renewing their contract with ATi. This deal was approx $80-$100 Mill a year.

http://blogs.zdnet.com/Apple/index.php?p=248

That blog quoted The Inq, which was simply wrong.

"Intel insiders have confirmed to DailyTech that the license for ATI to manufacture chipsets for the Intel bus has not been revoked."

Starting to look like we may as well get used to garbage integrated Intel video on all machines but the high end.

Apple has used nVidia lots even at the mid-end.

[exca1ibur]

Originally Posted by Eug Wanker

That blog quoted The Inq, which was simply wrong.

"Intel insiders have confirmed to DailyTech that the license for ATI to manufacture chipsets for the Intel bus has not been revoked."

Good to know.

Apple has used nVidia lots even at the mid-end.

Good point, however these options were there before the MacBook and Mac Mini, even with ATi, and we got STILL got integrated video.

[Eug]

Originally Posted by exca1ibur

Good point, however these options were there before the MacBook and Mac Mini, even with ATi, and we got STILL got integrated video.

The MacBook and Mac mini are the lower end. I think of the iMac as being mid end.

[exca1ibur]

I dont disagree with that. Just saying there are a pool of lowend dedicated video cards from ATi and nVidia that would have been better.

ATi Mobility X300 / X600
nVidia GeForce Go 61-6600

Just tough to think of a Macintosh being a creative and multimedia machine with a soft spot for video thats all. But I'm sure it was a budget move that was best for THEM, so what can we do. On that note, what doesn't work for me might for the next person.

[Eug Wanker]

Took the money I got from selling ATI and bought Intel (INTC) instead.

[goMac]

http://www.firingsquad.com/hardware/...rger/page6.asp

NVidia's reaction to the ATI buyout:
"FiringSquad: What is NVIDIA’s official reaction to the proposed merger between AMD and ATI?

Derek Perez: We look at today’s news as a positive for the company and there’s a couple of reasons why. Ultimately this leaves us as the only GPU and platform company that will be able to support both AMD and Intel. That’s huge. There’s no other GPU company, no other chipset company that’s going to come close to what we’re offering and that puts us in a really good position right off the bat. If you look at those two pieces of business, GPU and platform technology we’ve got four strong brands, SLI, GeForce, Quadro, and nForce which we’re all right now winning versus ATI everywhere across the board and I think you guys will agree with that."

Intel's reaction:
"FiringSquad: Now that ATI and AMD have announced that they are indeed merging we were wondering if Intel planned to continue offering CrossFire support in their 975X chipset as well as any other upcoming chipsets in the future? We were also wondering if Intel plans to renew ATI’s chipset license, we would assume that if the AMD merger does go through at the end of this year their bus license would be revoked correct?

Dan Snyder, Intel: We will study the transaction but have no comment at this time about any possible impact it might have on our agreements with ATI.

Dan also reiterated that their official position will “likely be beefed up in the coming days as we look closer at the transaction”, so we’ll just have to wait a few days longer before Intel gives their side of the story."