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AMD's $5.6 Million Deal To Take ATI |
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Written by Adam Gosling
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Saturday, 22 July 2006 |
Unconfirmed reports that sources close to a deal between CPU
maker AMD and graphics chip maker ATI. News of the US$5.6m deal could come as soon as
Monday, said finance industry sources talking on condition of anonymity
News broke in the Canadian paper Globe
and Mail after reports that the board of directors AMD had approved a
takeover offer were leaked by an "investment banker familiar with the talks".
Other reports followed that AMD executives had been spotted at
ATI's corporate headquarters in Ontario,
further fuelling the speculation.
Tech industry news site, The Inquirer, is
also carrying the story quoting "extraordinarily reliable sources" though it is
not clear whether these are the same sources.
In an earlier story for The Inq. Charlie Demerjian writing from
Computex explains why an AMD and ATI hook up is inevitable.
Demerjian says in that story he is convinced AMD will have
no choice but to buy or merge with the graphics card maker in order to achieve
its goals. Despite denials from senior management at the time, it seems
Demerjian was correct.
He writes "AMD would be sunk if they didn't buy ATI". The
reason? To implement GPU functionality directly onto the CPU.
"I would be shocked if Intel is not doing this now," writes
Demerjian.
Not all commentators are as convinced the rumoured merger is
a good idea for AMD which may lose focus on its successful CPU business by
getting involved in the graphics chip market.
Analysts also point out that one
of AMD's strengths is its independence when partnering with other firms and a
move to a more platform oriented approach similar to Intel's could limit the
company's flexibility.
The reports suggest that AMD would not have sufficient access to funds for an outright acquisition and that the deal may be pitched more as a merger.
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