AMD won't do anything to block Intel PC makers to stop using ATI graphics chips following its merger, but AMD's Chief Financial Officer Robert Rivet admits he expects sales of ATI GPUs to be lost to certain partisan Intel box builders.
Welcome to a very different world.
After months of rumour and speculation, originally sparked prior to Computex, AMD announced via conference call that it has begun the process of acquiring ATI. This acquisition has far-reaching implications and will mark a very important turning point in the microprocessor industry.
Head honchos from both companies were present at the announcement. CEO of AMD, Hector Ruiz, was the first to speak. "Good morning," he beamed. "In fact, this is a great morning."
Ruiz had good reason to be in high spirits, perhaps also aided by the thrill of spending a cool 5.4 billion dollars -- $4.2 billion in cash -- on ATI. Primarily, AMD now has the capacity to become a full platform provider, competing directly with Intel's platforms such as Viiv and Centrino. With ATI, he said, AMD is now more capable of putting up a "fight against The Monopoly", referring to its competitor and archenemy, Intel. Added Ruiz, "AMD and ATI ... intend to create a processing powerhouse."
The new venture will begin in 2007, after the purchase is expected to be finalised in the fourth quarter of this year.
One peculiarity of this announcement is that Intel and ATI have had a healthy relationship, at least up until now. In regards to this previously friendly relationship, AMD's CFO, Robert Rivet, commented on how revenue will no doubt be lost with Intel platforms ceasing to use ATI technology.
On the issue of this relationship, stated Ruiz, "If customers are excited with a product that ATI is providing to Intel platform customers, I would think that they would be delighted to let those customers continue to buy the product." Delighted, perhaps, in a swallow-the-pain-and-grimace manner.
Ruiz added that AMD has no intention of blocking the sale of ATI technology to anyone -- nonetheless, it is under the assumption that sales with Intel will diminish, but through no action on AMD's part.
Essentially, AMD would allow Intel to continue to do business with ATI as always, if they so chose. Historically speaking, however, this would be somewhat atypical of Intel. It's entirely possible that ATI -- rather, AMD -- will no longer be producing chipsets for Intel by the year's end, after the acquisition is complete.
This hot little potato, however, is now in Intel's court.
Dave Orton, CEO of ATI, was just as managerially jubilant as Ruiz. Bettering products to meet demands won't be enough for future innovation, he said. Starting in 2008, "We will reinvent what it means to provide processing altogether."
Intriguing hints were dropped for next generational processors in the direction of on-die integration of GPUs and CPUs.
Dirk Meyer, AMD's President, stated, "... we see the opportunity to integrate CPU and GPU cores together on a single die to better serve the needs of some segments." This wasn't just in relation to a standard CPU and GPU mash-up, but also with more specialised chips by sharing the technologies both ways depending on the required application.
Added Meyer, "... this goes beyond just simply integrating preexisting CPU and GPU IP onto a die but rather thinking more creatively about how we leverage the best of both companies to solve customers' problems"
Considering AMD is unlikely to pull the carpet from under its other close chipset partner, NVIDIA could potentially gain an advantage, being the only independent CPU-neutral mega-corp in both the graphics and chipset market. That said, it remains to be seen how NVIDIA will compete with ATI in its new platform-esque capacity and it will no doubt be considering the impact this will have on its business.
On NVIDIA, noted Meyer, "Relative to GPUs, I fully expect ATI's GPU business to compete in the market on AMD platforms with NVIDIA, and we're going to welcome that," adding, "We're going to continue to encourage other partners to participate in our ecosystem, and chipsets, and we're going to make available to them all the necessary standards to do that as best they can."
On the subject, added Ruiz, "We have had a great relationship with NVIDIA as well as others in the market place... We expect [these] great relationships to continue."
Coming back to Intel, it will undoubtedly be a tad shook-up. In fact, Intel is really the only company that stands to lose out to this acquisition. Even though an acquisition of NVIDIA by Intel has been suggested, it is highly unlikely; not only because of the love-to-hate-you relationship between the two, but it would actually be quite pointless for Intel, as it already has the resources to do everything in-house. It has generally proved itself quite content to demonstrate this time and again to the myriad of dropped partners.
When asked if ATI had talked to Intel about acquiring it, Orton responded, "We had not."
Ruiz returned a hazy reply when asked if there were to be any expected layoffs from either company. He pranced around the vicinity of what we believe to be 'no', but we weren't exactly assured.
Firing off shock-waves throughout the IT industry, this is without a doubt the most significant event to occur in the IT industry to date. This massive conglomeration of two semiconductor giants will be felt by the entire marketplace.
Naturally what is on everyone's mind is what the new company name will be, if there is a change. A wild guess, but here at APC we suggest DAAMIT. Just sayin'.
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