AMD to buy ATI

Entry posted by EricBall July 24, 2006

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So the rumors were true. Although I'm not convinced this marriage was a good idea for anyone.

According to the press releases, AMD is going to use ATI to improve it's chipsets, especially wrt integrated graphics, with the idea to integrate the graphics core and onto the CPU in the future.

First problem - AMD has significant financial issues. They are deep in debt, their stock ain't doing hot, their current mass-market CPUs aren't doing so well against Intel's, and Intel can price-cut much lower than AMD and still make a buck.

Second problem - AMD had the ability to partner with Via, nVidia, and ATI for chipsets (and make non-GPU versions in-house). That will probably dry up fairly quickly.

Third problem - ATI will get locked out of the Intel chipsets, leaving nVidia with the high-end integrated and Intel with the low-end integrated. Whether ATI will be able to go after the console market is anyone's guess.

Fourth problem - the growth market is in low-power integrated chipsets, not in high-performance GPUs. Not to say that ATI can't make low-end chipsets, but so could Via.

Fifth problem - integrating a high-performance GPU and CPU on the same die is going to significanly cut into yeilds. And AMD is currently having problems getting their process shrink & yeilds up to speed. Although this is more a future concern than something immediate.

I'm also just not seeing the full benefit to ATI. AMD doesn't have the finances to be a major sugar-daddy to ATI. It's cutting ATI off from a lot of flexibility which they had when they were on their own.

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