Chip giant snaps up graphics giant for a cool $5.4 billion to create a "processing powerhouse."

AMD acquires ATI

After weeks of speculation, AMD has finally confirmed that it is to buy ATI for a combination of $4.2 billion in cash and 57 million shares of AMD common stock.

AMD has announced that the deal will create "a new and more formidable company, determined to drive growth, innovation and choice for its customers, particularly in the commercial and mobile computing segments and in the rapidly-growing consumer electronics market."

Cutting through the corporate-speak, this seems to indicate a desire to take on Intel at the platform game, with mobile computing referring to Centrino and consumer electronics to Viiv.

This impression is strengthened its statement that "the combination will create a processing powerhouse by bringing AMD’s technology leadership in microprocessors together with ATI’s strengths in graphics, chipsets and consumer electronics."

With the recent launch of the Core 2 Duo processor, Intel has threatened to wrest the initiative away from AMD. This move could create an organisation that can compete on even terms with Intel indefinitely.

Some industry insiders have speculated that, in the short term at least, the move will be damaging due to potential difficulties created between AMD and Nvidia and ATI and Intel. However, the mid term gains in efficiency and joint R&D capability are expected to more than compensate for that. Only time will tell.

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