AMD to buy ATI for $5.4 billion

by Ross Miller { Jul 24th 2006 at 1:08PM }

Chip maker (and Intel rival) AMD has agreed to purchase graphics guru ATI for a whopping $5.4 billion, a move that is sure to turn a few heads. While the deal still needs final approval from the shareholders of each firm, the deal is financially fair to ATI shareholders, according to its financial advisers.

ATI, soon to be known as "the ATI business division," and AMD have trailed behind Intel for leadership in the GPU and CPU markets, respectively. However, as PC Magazine points out, Intel loses its advantage in graphics department when one factors out integrated graphic chips (you know, the ones that are killing PC gaming).

While obvious questions remains, one has to wonder how ATI rival Nvidia -- who has in the past supported AMD chipsets -- will respond, or how its business will be affected by buyout.

[Thanks, bassbeast]

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Reader Comments (Page 1 of 1)

Feras @ Jul 24th 2006 1:28PM

OMG!

MooNKighT @ Jul 24th 2006 1:30PM

Good, AMD still managed to get their foot into the next gen consoles door.I felt bad for AMD when they were passed up in favour of IBM.I guess this deal will bring them closer to microsoft.I wonder if this will rub of on AMD with some ZUME or the fabled xboy love.

vaylen @ Jul 24th 2006 1:35PM

Expect nVidia to get all chummy with Intel FAST.

Dracula Jones @ Jul 24th 2006 1:38PM

*sniff* I always cry at weddings!

CyberKnight @ Jul 24th 2006 1:41PM

Intel buys Nvidia. Let the war continue!

Robotic House Plant @ Jul 24th 2006 1:48PM

This is both good and bad. Good from AMD's perspective that they can potentially sell motherboards that include ATI chips or just sell the chips together as a package deal. But bad in that NVidia may be left out in future co-mingling deals or may have to fight that much harder to be included or considered.

I also have to wonder now that ATI is owned by AMD, how this will affect Microsoft and/or the next Xbox. Could you just imaging them changing the processor YET again. In my opinion, they should have gone with AMD for the beginning.

I don't see Intel going after NVidia, since Intel has it's own video chips, but you never know. I'd much rather see NVidia video with Intel motherboards than Intels own generic video chips.

elmer @ Jul 24th 2006 1:48PM

Interesting.

Now we might see some competition for the type of computation Cell can do. Imagine the power of integrating general purpose logic and parrallel programable shaders. This is a fine day for scientists. Now maybe we can solve some protein folding on the cheap.

Scooby Doo @ Jul 24th 2006 1:51PM

The timing here is pretty coincidental, considering the earlier topic on Crysis. There was talk of this in the business community for a while and we were all expecting this announcment this morning. ATI stock rose like $2 and somthing in over-night trading since Friday's close. What's strange is that most analysts, or amateur analysts like myself, kind of wonder what AMD is really getting out of the deal. Particularly, why purchase ATI instead of forming a stategic partnership? Epobirs...I know you're pretty close to the industry, what's your take?

As a gamer, and one who's gotten sick and tired of figuring out what video card to buy with their atrocious short life-cycles and screwy model numbers, one would hope that this is a sign of a hardware move to more standards in the video graphics market. (That's probably just wishful thinking on my part though.)

Not speaking from personal experience, I've heard that AMD is a good solution for gaming rigs. (I've always stuck with Intel chips, even when they're overpriced just to ensure 100% compatibility.) Couple that with one of the top two graphics chip developers and it could give AMD a real edge when considering a PC for gaming. However since I've seen nothing about what AMD is planning with this takeover, it could also mean that AMD is going to make more use of integrated graphics cards on motherboards. The brief statement about increasing marketshare in the business community lends some credibility to that hypothesis. We gamers may not get a darn thing out of this deal, but I have hope.

I doubt NVidia has much to worry about...yet. The graphics wars go far beyond the IBM PC realm. Couple that with the recent investor problems AMD is having and the new Intel chips that AMD should be worried about, I don't think that AMD is going to be grabbing up that much market share in the near future. They should be more worried about Intel's position to undercut them or increase EPS right now.

k man @ Jul 24th 2006 1:53PM

http://www.bit-tech.net/news/2006/07/24/intel_pulls_ati_chipset_license/

ill trooper @ Jul 24th 2006 1:54PM

Now THAT's 'integrated graphics'

KR @ Jul 24th 2006 1:59PM

Crap. My processor of choice is now in bed with the RIVAL of my graphics card maker of choice.

Sir Stank @ Jul 24th 2006 2:02PM

Damit! I was going to buy ATI.

spoo @ Jul 24th 2006 2:15PM

@Scooby
"and the new Intel chips that AMD should be worried about, I don't think that AMD is going to be grabbing up that much market share in the near future."

It seems the last few years the Intel is just playing catch up with AMD. AMD is not just sitting back and letting Intel beat them with the Conroe chip. AMD is bringing out 4x4 chips and boards to take over the lead once again.

Night Elve @ Jul 24th 2006 2:16PM

I really dont like this.

Scooby Doo @ Jul 24th 2006 2:39PM

Spoo,

That's based on some more recent news. It's no secret that AMD (unlike Cyrix) managed to become a true competitor to Intel over the years and I am not saying that I don't think they will remain so. However Intel got into the trouble that most companies with huge marketshare do: they got big, overconfident, and sloppy. It's been felt in the Economic Sector for quite some time. The cost of Intel CPU's were significantly higher than those of AMD and many of them couldn't even compete with the same class chip from a performance standard.

However, recently Intel has made a number of internal, and business changes to reduce those weaknesses. There's actually several articles about this invigoration in Intel, however check out this AP article:

http://biz.yahoo.com/ap/060707/chip_outlook.html?.v=2

AMD definitely has some problems right now and it might be a little while before they start posting a profit again. And Intel is BIG. It's hard to compete with the Intel's and Microsoft's in the world if you lose you're number one benefit: lower costs. Unless AMD pulls a rabbit of the hat, I just don't see a significant increase in growth coming; even with the aquisition of ATI.

n8 @ Jul 24th 2006 2:40PM

Perhaps very little will change. AMD could have just bought ATI to polish up it's scattered company and provide it with some excellent fab creation facilities and knowledge. In the mean time, they'll just let ATI be all creative like normal, but help them suggest improvements within thoses ideas.

Scooby Doo @ Jul 24th 2006 2:43PM

Sorry, this is the link I was thinking of. I know 'cause I was reading it this morning:

http://news.yahoo.com/s/nm/20060724/tc_nm/intel_prices_dc_1

n8 @ Jul 24th 2006 2:45PM

Crazier yet, they could go for the all-mighty GPU in CPU combo.

Greg2k @ Jul 24th 2006 2:50PM

Dang. I hate AMD and I love ATI. Now what the f*** do I do? XD

Jesse Pentecost @ Jul 24th 2006 3:02PM

yet another canadian company goes down the drain

GSI @ Jul 24th 2006 3:03PM

/puke

Man...(imo) this sucks b/c I'm no fan of ATi. I've been a nVidia person since the Geforce cards started coming out and I've NEVER had a problem with them. I've never had a problem with them in my systems or in the ones I've built for people.

ATi on the other hand...there usually is always some lame problem with the driver.

All I hope for is that nVidia keeps updating their chipsets b/c I have a AMD Dual Core system with a nForce4 SLI chipset (and 2 Geforce 7800 GTs.)

spoo @ Jul 24th 2006 3:20PM

Thanks for the link Scooby but the yahoo article states that "With no new products until the middle of next year, AMD will have to keep its prices low to hold onto its gains." Yahoo seems to be a tad off in the news of 4x4 that is stated to be out by the end of the year (yet unknown if it will use the X64 or a new processor.) The 8x8 should come out sometime next year. Intel is planning on having a quad-core processor out by the end of the year also.

This is great for moving things ahead and it seemed that Intel is finally moving things beyond the speed race of the past. Intel and AMD both have been doing sub par on the financial side but ATI should help AMD in the long run.

Jacob @ Jul 24th 2006 3:41PM

18.
19.

Agreed on both your posts. Hate AMD, like ATI. Sad to see yet another good Canadian company fall into the hands of the americans. (But we can take spiteful solace in the fact that in a few years AMD will be bought by the Chinese.)

GSI @ Jul 24th 2006 3:53PM

/rant

Kinda retarded that people think that EVERYTHING Americans do is bad. It's called BUSINESS people.

Companies buy other companies ALL THE TIME. It isn't some thing that "americans" only do...it's something that companies do ALL over the world do.

/end rant

I'm on the opposite...I like AMD more (after a short journey with Intel) for the fact that you get more bang for your buck with AMD. PLUS AMDs tend to run cooler as well.

Free Healthcare @ Jul 24th 2006 4:50PM

This sucks I was a proud of ATI being Canadian, being Canadian myself and now an American based company just write a cheque and buys them out. They will probably consolidate their branch and back out of Canada entirely. Typical American Business Practices, kind of sounds like how the NHL lockout occurred. Just pay your players exorbitant amounts of money even though we probably will not be able to pay him that in a few years. Though the cool this is with the exchange rates being so good in Canada right now at least they are almost getting a dollar for a Loonie. And we would probably see more heavy competition for NVIDIA.

K1ller 1ns1nct @ Jul 24th 2006 7:23PM

Does this mean better Linux support for ATI cards?

T-Bag @ Jul 24th 2006 9:41PM

Imagine how much porn they could have bought with that much money. What a shame.

Anyhow, this would be big news to me if I gave a shit for anything pc related. Though, this might seriously hurt pc gaming for reasons I myself may not disclose at this time. In other words "I'm a console fanyboy".

I'm not being sarcastic.