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AMD and ATI Merger: Our Questions Answered
Date: Jul 25, 2006
Author: Dave Altavilla and Marco Chiappetta
Introduction and Comments


Rumors have been circulating for weeks, but yesterday the two companies involved made it official. AMD and ATI announced that the two companies planned to merge in a deal worth approximately $5.4 billion dollars. The quote below from the initial press release reveals some of the combined entity's vision of the future...

"On July 24, 2006, AMD and ATI announced a plan to join forces, in a transaction that will combine AMD's technology leadership in microprocessors with ATI's strengths in graphics, chipsets and consumer electronics. The result is a processing powerhouse: a new competitor, better equipped to drive growth, innovation and choice for its customers in commercial and mobile computing segments and in rapidly-growing consumer electronics segments. The transaction, valued at US $5.4 billion, is expected to close in Q4 2006 subject to approval by ATI shareholders, court approval, regulatory approvals and other customary closing conditions."

Some more details are available on AMD's website, right here.  Not content with the general information available on-line, we fired off some questions to AMD to get a little more detail on the company's future plans and how they feel the merger will impact the Computing Market and consumers in general.  Our questions and AMD's answers are posted below and on the proceeding pages.

Considering the enormity of this news, and the potential impact it could have on a number of major companies in the technology industry, we also thought we'd get some opinions from Intel and NVIDIA regarding the proposed AMD / ATI merger as well.  For now, all Intel had to say was,"We will study the transaction, but have no comment at this time about any possible impact it might have on our agreements with ATI."  Clearly this merger is a move AMD considered necessary to remain competitive with Intel moving forward, but Intel isn't quite ready to give an in-depth opinion on the matter.  We're sure that will come in time.

NVIDIA on the other hand had a little more to say.  A representative from NVIDIA said, "Today's news about the acquisition of ATI by AMD is a positive development for NVIDIA. We are now the only graphics processor and core logic company that supports both Intel and AMD processors. We will continue to execute on our strategy, which is to develop industry-changing GPU and platform technologies, extend the use of the GPU into new applications, and expand its reach into all computing devices - from PCs to servers to phones."  We've also sent a few direct questions over to NVIDIA and hope to have some more detailed responses on-line soon.

Our questions to AMD are italicized and the company's exact response, courtesy of Jon Carvill, immediately follows.

HotHardware: AMD has publicly made statements in the past regarding the importance of the co-processor and the importance of it to your overall strategy. Can we expect a tighter coupling of the GPU with the CPU in future AMD architectures?

AMD / ATI: In June at our analyst day in Sunnyvale, AMD introduced "Torrenza" and reinforced our commitment to an open architecture for third-party innovation.  In the near term, 2007, we should be able to deliver new customer-centric, unified solutions for key market segments like mobile and commercial.  For these market segments a tighter coupling of the CPU and GPU has the potential to deliver a compelling performance-per-watt proposition.


HotHardware: What sort of fab efficiencies can be realized in the acquisition of ATI, for either GPU or Core Logic chipsets? Is there a near term and long term strategy that you can discuss?

AMD / ATI: ATI will continue to manufacture its graphics processors with TSMC and UMC for the foreseeable future. AMD is very comfortable with a hybrid approach to manufacturing as evidenced by our recent success in ramping microprocessor production at Chartered Semiconductor.


More From the Interview


HotHardware: What about NVIDIA's role as a core chipset supplier? Can you comment on their relative importance moving forward and what effect this transaction might have on further development with the nForce family of core logic chipset products?

AMD / ATI: NVIDIA continues to be an important chipset partner for AMD. We are committed to ensuring our customers have maximum choice and flexibility in choosing the solutions to best meet their unique needs. With the acquisition of ATI we now have the ability to provide customers with more choice than ever before - whether on a unified or best-of-breed platform.


HotHardware: Would you expect that logically NVIDIA might align strategies and product efforts more targeted to Intel solutions now, at least from a chipset perspective?

AMD / ATI: That's a question that you should be asking NVIDIA. It would be inappropriate for us to comment on their strategy.


HotHardware: Any initial areas of opportunity relative to incorporating GPU-specific functions on the CPU or vice versa?

AMD / ATI: It's too early to get into specific product details at this point but there are a number of areas we feel we can increase the pace of CPU/GPU innovation. Key market segments like commercial, mobile and the digital home present significant opportunities for AMD and ATI to innovate and deliver new value to our customers.


HotHardware: What are the main key perceived advantages of this acquisition and can you help us understand some their immediate impact?

AMD / ATI: We believe this acquisition positions us as a processing powerhouse in the industry. The marriage of AMD and ATI's best-in-class computing, graphics, digital media and processing technologies will result in better, more innovative and more complete customer-focused solutions. AMD and ATI complement each other's strengths across technologies, markets, manufacturing and geographies, and their collective roster of strong customer relationships represents a who's who in the computing and consumer electronics industries. ATI has a number of complimentary strengths to AMD and this acquisition allows us to drive increased growth innovation in areas like mobile, commercial, consumer digital media and high-growth markets.

Our Final Questions & Conclusion


HotHardware: How will this merger affect the discreet graphics card market in the short term? And in the long term? Will the Enthusiast segment remain a major focus?

AMD / ATI: AMD and ATI remain committed to the market for discrete graphics and believe it's a strong and viable market moving forward. The enthusiast segment will continue to be a core focus of the combined company. With exciting technologies like 4X4 and CrossFire we expect to increase the pace of innovation for gamers and PC enthusiasts in the future.


HotHardware: What might some of the ramifications of the merger be for your product roadmap efforts in the Desktop PC market segment in the long term? Mobile? Servers? Media Centers?

AMD / ATI: At this time we can't offer too many specifics or technical details on our long term roadmaps. In the near term, 2007, we should be able to deliver new customer-centric, open platforms for key market segments faster than either company could have done alone. Today we both have "go-to-market" strategies. By putting them together, because we have such complementary strengths, we believe we will create an "accelerate-to-market" strategy to allow us to deliver in 2007 products that will bring very specific value to customers in key segments like commercial and mobile markets. We will aim to transform processing technology with general-purpose, media-centric, data-centric and graphic-centric open platforms, to re-engineer the future, in 2008 and beyond.


HotHardware: Processor cores have historically undergone significant architectural changes roughly every 5 years or so. But a new generation of GPUs typically emerges roughly every 18 months. If AMD and ATI function as a single entity will processors and GPUs continue to advance at their current pace?

AMD / ATI: Processors and GPUs present unique approaches when it comes to introducing new architectures. We believe the combination of AMD and ATI will allow us to leverage each others respective strengths in these areas. AMD can benefit from ATI's expertise in aggressive architecture transitions while ATI can benefit from AMD's industry-leading manufacturing systems and business processes.


HotHardware: Will the merging of AMD and ATI ultimately lead to a closed platform of sorts, where AMD's processors are coupled to AMD/ATI's core logic chipsets and GPUs, and no one else's?

AMD / ATI: AMD has and will continue to be committed to an approach of customer-centric innovation.  One of the key pillars of customer-centric innovation is delivering open platforms that provide customers with a maximum amount of choice and flexibility with our products.

There you have it -- some answers directly from the parties involved.  This merger, if approved, will have a far reaching impact on many segments of the PC and Consumer Electronics markets.  We wish both companies the best of luck, and look forward to some potentially exciting new technologies in the years ahead.  This is big news.  Make no mistake about it.

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