We were all expecting it, different rumours started to appear everywhere, and now it’s confirmed AMD (Advanced Micro Devices), the No. 2 supplier of computer processors, said on Monday it would acquire graphics chip maker ATI Technologies Inc. for $5.4 billion in cash and stock to expand its product mix and grow market share as it battles Intel Corp. The offer is 24 percent more than ATI’s closing price last week.
AMD, which has been shelling out billions to add factory capacity so it can better compete with Intel Corp., will pay for the acquisition with the help of a $2.5 billion loan from Morgan Stanley. AMD expects the deal to contribute “slightly” to earnings next year and add “meaningfully” to profit by 2008. The purchase will save the combined company about $75 million by the end of 2007. And whan can we expect after this transaction? As a result of the merger, the chipset business will rest almost wholly with AMD and Intel. Nvidia will be left to struggle on their own. It could result in Nvidia finding it hard to compete. It’s not just chipsets either. ATI will gain access to AMD’s fabrication plants. Capacity willing, it should help them reduce the cost of producing their GPUs. The end result is a tougher GPU market for Nvidia too and of course, better prices for us, home users and final customers…
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