Or so they say...

Well, we’ve heard rumor after rumor that Dell would eventually consider using AMD processors. Everyone dismissed the rumors and said that the analysts were blowing smoke. Eventually, Dell caved and announced that it would use Opteron processors in some of its server systems. Well, everyone loves a good rumor and this one is a whopper. Forbes is confidently reporting that AMD may be in talks to buy ATI Technologies, claiming that an "AMD-ATI Merger Looks Likely."

ATI employees have been talking and analysts are buzzing about the possibility of an AMD-ATI merger. "The synergies of this seem consistent with the recent announcements by AMD to significantly increase capacity over the next few-years. We believe ATI is a rare-buy in the semiconductor space right now given the near-term tie-up dynamics," said analyst Apjit Walia.

AMD and ATI are already closely linked together as ATI provides integrated chipsets for AMD desktop and notebook chip offerings. ATI's recently announced Radeon Xpress 1100 and 1150 chipsets provide DX9-level integrated graphics capabilities for AMD's new AM2 processors. And chances are if you purchase an AMD based notebook, you’re going to find an integrated ATI chipset under the keyboard. But while ATI has the upper hand in the mobile sector with AMD systems, NVIDIA clearly is the leader on the desktop side of things. It remains to be seen what an AMD-ATI merger would do for the desktop market.

But does a merger between AMD and ATI really make sense at this point in time?  Forbes reports:

Walia based his prediction on recent checks in the PC food chain. RBC has an "outperform" rating and $23 price target on ATI, and no rating on AMD. The firm expects ATI to report fiscal 2007 earnings per share of $1.06. It has long been discussed that the graphics-companies are likely to be bought by one of the microprocessor companies, according to Walia. However, for AMD-rival Intel, a partnership with a graphics company may not be the best idea.

Thanks to Ryan Shrout and mAdD INDIAN for sending in this news.  Of course, Forbes has been wrong before.

"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007
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