AMD Agrees to Buy ATI for $5.4 Billion

AMD (Advanced Micro Devices) the number two chip manufacturer that's gaining ground on Intel announced that it agreed to buy ATI for $5.4 Billion dollars. ATI Technologies makes graphics cards and the GPU (Graphics Processor Units) chips for many top rated video cards for PCs. Also number two in its respective market, ATI was Microsoft's surprise pick to develop the GPU for its Xbox360.

By developing its own innovative approach to CPU architecture AMD has carved away much of Intel's once undisputed dominance in processor manufacturing. AMD's latest move will surely be watched closely by Intel. Today an AMD CPU delivers more cycles of processing power to your PC with the most efficient chips on the market. Although Intel is still the tops in CPUs, AMD is now making a power play that could possibly change the shape the business.

By purchasing ATI, AMD is making the statement that it will probably integrate graphics technologies into future CPUs. This wouldn't be the first time we've seen media architecture built into a CPU. You can expect to see future AMD processors integrate graphics technologies the way its CPUs already integrate memory controller technology.

Speculation from industry analysts is already overflowing. Many expect Intel to quickly respond by making a bid to buy ATI's competitor Nvidia, the top manufacturer of Graphics Processor Units. But this would seem to be reactive and may not pay off in the long term for Intel. Historically Intel hasn't sought out such integration into its CPUs. Although if there was ever a time for Intel to rethink its strategy, the time may be here.

It's also possible that AMD may not be finished with high profile acquisitions and might go after Nvidia, ATI's competitor in GPU development. Some point to the connections between AMD and Nvidia through Jen Hsun Huaang, co-founder of Nvidia Corporation and former designer at AMD. Nvidia and AMD already partnered to create the nForce chipsets specifically for AMD Athlon and Duron microprocessors. The partnership has been a success for both companies and a major source of revenue for nVidia.

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