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Reports claim a $5.6B deal is about to close on an unprecedented merger

According to a report in The Globe and Mail, the board of directors at AMD has allegedly approved the takeover of Canadian graphics firm ATI Technologies. The report claims that the information was released by an investment banker that was part of the discussions. According to other sources, AMD executives were also seen at ATI's headquarters in Markham, Ontario. The report indicated that AMD is considering a $5.6 billion takeover bid for ATI.

Speculation and rumors have run rampant over the last several months about the possible merger between AMD and ATI, but no concrete details have been revealed. According to reports on ATI's share prices, the company's shares have been trading at double the usual volume today. Analysts said that AMD would be making an offer of 20 to 40 percent premium to ATI's current share price. ATI shares traded at $16.12 on the NASDAQ today during after hours, which is up 39 cents from yesterday's closing.

Reuters has also picked up on the story, claiming that "Some analysts have questioned the rationale for an AMD-ATI merger, and others were surprised that the speculation received no attention from analysts during AMD's earnings conference call on Thursday."  DailyTech had punched in for question during the investor conference call on Thursday, but a moderator would not respond.

According to Eric Gomberg, an analyst for investment bank Thomas Weisel Partners, "there has been considerable industry speculation that AMD may pursue an acquisition of ATI Technologies, although such an outcome is by no means certain." Gomberg's comment came in earlier this week, but word circulating around investment bankers who are aware of the talks between ATI and AMD surfaced just several hours ago.

Recent reports indicated that Intel roadmaps no longer included ATI chipsets. Although Intel had been producing motherboards using ATI logic, upcoming boards like those that support Core 2 processors are void of any chipset from ATI. Interestingly, ATI and Intel had agreed to several cross-licensing programs that allowed them to take advantage of some of each other's technologies. Several analysts however, indicated that the merger between AMD and ATI to be "out of strategy for AMD and out of focus. Stupidity is no barrier to tech mergers."

A report in the Wall Street Journal confirms the talks between AMD and ATI (subscription required) today. Although the deal is not final, the report said that representatives from both companies declined to comment.

AMD has previously indicated that it would embrace embedded processor technologies for its Torrenza platform -- some of which would include math and physics co-processors.  However, the company has recently exited all non-x86 processor design.

Update 07/24/2006: AMD and ATI jointly announced the confirmation of the $5.4B merger today (July 24, 2006)


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Everything..
By othercents on 7/22/2006 2:31:32 AM , Rating: 1
Ok now really I have seen people say this is bad for nvidia, but overall it really isn't. Nvidia can still be the same high end manufacturer of chipsets and video cards. They have signed other deals with Apple for video iPods and I'm sure they have many other things in the works.

This should just heatup competition and allow Nvidia to provide aftermarket chipsets for both AMD and Intel. Hopefully this will mean less ATI favoritism from Intel and maybe Intel will provide a chipset of their own that supports SLI.

So what about AMD and ATI?

Well ATI can quickly move into dual core GPUs and 45nm process. This should give the ATI brand an edge over all other video card manufacturers. This also allows AMD to manufacture their own chipsets and possibly their own motherboards. It is very possible that there might be a high end IGP for vista giving users the power they need to run all the latest games which the Intel IGP hasn't been able to do. Don't forget that Dell just started buying from AMD and now that there is a total CPU/GPU/Chipset package, we could start seeing AMD desktops from Dell.

You also need to think about all the manufacturing plants that ATI has. They build their own video cards which Nvidia doesn't even do. I think this is a win for everyone really. Especially the customers. You will have two CPU manufacturers that also create their own chipsets. However the advantage is to AMD since they will also have a very good video card line. (yeah I know core 2 makes Intel your god that you will now bow down and worship)

Other




RE: Everything..
By Niv KA on 7/22/2006 3:18:28 AM , Rating: 2
quote:
This should just heatup competition and allow Nvidia to provide aftermarket chipsets for both AMD and Intel. Hopefully this will mean less ATI favoritism from Intel and maybe Intel will provide a chipset of their own that supports SLI.


Intel doesn't favor ATi, Nvidia doesn't give them the SLI suport

-Niv K Aharonovich


RE: Everything..
By MartinT on 7/22/2006 3:26:07 AM , Rating: 2
quote:
Well ATI can quickly move into dual core GPUs and 45nm process.


(I) Forget about "dual-core" GPUs.

(II) We all know how well AMD does on the process front, this might actually impeed ATI's performance.

(Though I have to add that the pure though of producing 300mm² dies that sell for ~$60 in AMD's leading-edge FAB should send shudders down one's spine.)


RE: Everything..
By shecknoscopy on 7/22/2006 4:16:17 AM , Rating: 2
quote:
They have signed other deals with Apple for video iPods and I'm sure they have many other things in the works.


You know, it dawns on me now that, if Nvidia could produce Macs capable of playing any decent games from the previous half-decade, they'd have pretty much total dominance of a yet unexplored (and I assume, large) market. Namely: the eye-candy monkeys who like things "pwetty" and "simple," (read: "exclusively mac users") but who still want to get their game on. Provided that their game isn't exclusively "The Sims." Number one. With the settings set to low. And no sound.

I'm serious, here - the newest generation macs are pretty sexy. Now, if they could produce some decent 3D rendering in addition to "Garageband," I'd consider shelling out my hard-earned dough for them. Or mug someone else and use his dough. The point is, dough would be spent.


RE: Everything..
By Xavian on 7/22/2006 8:22:57 AM , Rating: 2
except the problem of most games in the last half-decade being written for DirectX and not OpenGL...

Just because you have a good graphics card in your system, doesn't mean developers are going to write games for it.


RE: Everything..
By lethalchronic on 7/22/2006 12:00:21 PM , Rating: 2
I'm not sure if I've resigned myself to the gallows just yet (i.e. the macintosh) ;)


RE: Everything..
By Locutus465 on 7/22/2006 8:22:44 PM , Rating: 2
Well in theory nVidia could continue to manufature AMD chipsets as they have in the past at the same quality levels. If they did they would continue to compete quite successfully... They have stated in the past that they might not be so interested should ATI and AMD merge, which would just be a damn shame.


"Game reviewers fought each other to write the most glowing coverage possible for the powerhouse Sony, MS systems. Reviewers flipped coins to see who would review the Nintendo Wii. The losers got stuck with the job." -- Andy Marken

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