AMD & ATI Want to Merge: And a New Juggernaut Will Be Born

[Jason Dunn]

<div class='os_post_top_link'><a href='http://www.amd.com/us-en/0,,3715_14197_14198,00.html?redir=goBG01' target='_blank'>http://www.amd.com/us-en/0,,3715_14197_14198,00.html?redir=goBG01</a><br /><br /></div><i>"On July 24, 2006, AMD and ATI announced a plan to join forces, in a transaction that will combine AMD’s technology leadership in microprocessors with ATI’s strengths in graphics, chipsets and consumer electronics. The result is a processing powerhouse: a new competitor, better equipped to drive growth, innovation and choice for its customers in commercial and mobile computing segments and in rapidly-growing consumer electronics segments. The transaction, valued at US $5.4 billion, is expected to close in Q4 2006 subject to approval by ATI shareholders, court approval, regulatory approvals and other customary closing conditions. Headquartered in Sunnyvale, California with centers of excellence around the world, the new company will have a combined workforce of approximately 14,900 employees."</i><br /><br />Lots of rumours about this last week, and it looks like it's finally going to happen. I can't imagine ATI's shareholders not approving this, but the question is whether or not NVIDIA and Intel have anything to worry about from this. What do you think?

[Jason Eaton]

Maybe I am missing something here, but I don't see that much of a benefit or advantage in this merger right now.

Now, of course AMD and ATi can share knowledge on construction and all that so the individual CPUs and GPUs can benefit. However AMD doesn't really have a large chipset base to connect the two (unless something changed it has been VIA, SIS, or nVidia (ironic) for AMD motherboard chipsets)

Throw in the fact that Intel still dominates the business world with its motherboad, intergrated graphics chipsets, and CPU for mass market. I don't see the merger having that much consumer impact except for high end gaming and specialized markets.

Call me a nay sayer but this might actually be bad if AMD decides to micro manage ATi and by combining they become less focused lowering the over all product that gets out the door.

[Felix Torres]

The deal runs three ways:

1- ATI has a nice chipset business that fits in with AMD's lack of inhouse chipset capability.
2- Both AMD and ATI have been looking to get into the gadgets business and combining ATI's media IP with AMD foundries makes good sense.
3- There is talk of doing combo CPU/GPU chips and that makes a lot of sense since GPU chips are *monster* floating-point and vector processors. A combo chip would be extremely valuable in the high-end server and in the supercomputing business.

A fourth posibility that hasn't been discussed much is that a combo unit from AMD/ATI could feature onboard memory controller and caches plus all sorts of added media and chipset functions. The result would be very close to the fabled, long-discussed but never seen, system-on-a-chip. There would be a very large market for those chips in the HD video gadget business.

Lots of value in this matchup.
Except it is the wrong two companies.
ATI's chipset expertise is for Intel chips.
Not sure why AMD didn't go for NVIDIA, which is a strong AMD supporter.

As for Intel and NVIDIA, well, Intel is looking to simplify its portfolio; it recently ditched its gadget cpu and wireless businesses, so looking to add high-end graphics doesn't seem to be high on their agenda.
But if NVIDIA hurts enough, somebody will end up buying them.

If not Intel, maybe IBM...

[Jason Dunn]

Yeah, I agree with you Felix, AMD + NVIDIA would have been a monster combination, I'm not sure ATI is the best partner for them.

[Felix Torres]

It could be that NVIDIA turned down the offer or the asking price was too high.
Or it could be AMD is more interested in ATI's STB/HDTV scaler chipset business, something NVIDIA doesn't have. But that kind of tech could've been bought for a lower price from another player (Cirrus Logic?) so the PC GPU tech has to be at the heart of the deal. And that brings us back to NVIDIA all over again... ;-)
We'll just have to wait till 08 to see what AMD is up to...

[Jason Eaton]

What I think will be most interesting is if Intel plays nice with ATi after this.

For ATi to create chipsets for Intel platforms, Intel has to give ATi a liscense to do so. If Intel takes the low road and pulls permission from ATi, there might not be an Intel CPU based motherboard with an ATi chipset.

So I guess it will be interesting to see how far Intel is willing to push against AMD. Will they do so to spite ATi and potential customers or let things slide to keep the ATi(and now AMD) brand motherboards be available with Intel CPUs?

[Felix Torres]

Some folks think this is a really, really bad move...
http://foxnews.smartmoney.com/Techsmart/index.cfm?story=20060724