AMD Completes $5.4 Billion ATI Acquisition

Updated: With its purchase, AMD is positioning itself to offer better chips for business computers as well as opening new markets to reach more consumers.

Advanced Micro Devices has completed its $5.4 billion acquisition of graphics chip maker ATI Technologies, a move that company officials said will enable them to offer better flexibility and energy efficiencies in their processors products.

The acquisition, which was first announced July 24, is seen by industry observers as a way for AMD to strengthen its hand in the chips market and deliver more tightly integrated processors and supporting chip sets.

AMD announced the closing of the deal Oct. 25.

With ATIs graphic chips, chip sets and supporting chips, AMD can now combine that technology with its own processors to better handle a PCs input and output functions.

In that way, AMD can now offer several new PC platforms for the computer makers that use its processors. In a release, AMD said that it would begin to focus these new integrated platforms in the commercial, mobile computing, gaming and media markets.

AMD is also planning to build a new class of x86 processors that will integrate the CPU and graphics processing unit at the silicon level and a new design. This project, called "Fusion," will allow for better step-function increases and performance-per-watt, according to AMD.

The Fusion processors will start becoming available either in late 2008 or early 2009, according to the company.

AMD officials will outline their product roadmaps in greater detail during a Dec. 14 event, but Pat Moorehead, vice president of advanced marketing for the Sunnyvale, Calif., company said that next year the company will roll out a number of new products that will benefit from the tighter working relationship between the AMD and ATI engineers.

"Instead of being neighbors, were becoming family, and the engineers can work more closely together," Moorehead said.

Already AMD has begun integrating ATI employees in such areas as platform development and tech support into the AMD fold, he said.

In 2007, AMD will introduce products for commercial PCs that will offer a stable image platform and greater optimization for Microsofts upcoming next-generation Windows operating system, dubbed "Vista."

Currently, 3-D technology primarily is used for gaming and design workloads. With Vista, 3-D will be a part of almost everything a computer user will see in front of them, Moorehead said.

In addition, AMD will roll out Turion mobile chips with better graphics and extended battery life, he said.

Also in 2007, AMD will unveil a "Torrenza"-compliant streaming computing plug-in, a key technology for such workloads as those in the high-performance computing space, he said.

Torrenza is a program by AMD in which the chip maker has open up key parts of its chip technology to enable direct connections between a co-processor and other system components.

The result is greater flexibility in designing processor technology for particular jobs—a desktop PC versus a workstation versus a game console, for example, Moorehead said.

Its based on AMDs Coherent HyperTransport technology, which enables processors to talk directly with each other and memory, rather than having to go through a front-side bus.

Removing the front-side bus also helps with energy efficiency by taking out power-consuming components, he said.

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Despite the acquisition of ATI, AMD will continue working with other graphics chip makers such as Broadcoms ServerWorks group and Nvidia, to give choice to users, Moorehead said.

For example, AMD in November will be rolling out its 4x4 desktop entertainment platform, which will feature Nvidia technology, he said.

AMD has been involved in an ongoing battle with Intel, the worlds largest processor maker. On Oct. 18, AMD announced higher third-quarter profits compared to last year and shipped 18 percent more processors than it did in 2005.

The merger of AMD and ATI could also mean lower PC prices and the acquisition could help AMD streamline and simplify the manufacturing of its processors.

Recently, AMD cut a deal with Dell to offer its processors in both Dell PCs and servers. Dell unveiled the first of these Opteron-based servers Oct. 23 at the Oracle OpenWorld show in San Francisco.

Already the other top-tier server OEMS—IBM, Hewlett-Packard and Sun Microsystems—offer Opteron-based systems.

Editors Note: This story was updated to include information and comments from AMD.

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