08 MAXIMUMPC october 2005
O
ne look at today’s tech headlines and
you might think it was Wife Swap or
Desperate Housewives , not the boring old PC
industry. In the latest surprise coupling, AMD
has shocked the world by announcing it will
buy graphics vendor ATI for $5.4 billion.
Coming on the heels of Apple divorc-
ing IBM to hop into bed with Intel, and
Dell and Alienware doing the horizontal
mambo, it’s like the nerd version of the
1960s free love movement.
But AMD’s affair could be the most intrigu-
ing tryst of the season because the alliance
will allow AMD to compete directly with Intel in
one of its most profitable markets: mass-mar-
ket desktop PCs. AMD officials said that in the
short-term the company needs its own core-
logic chipset to further penetrate the commer-
cial and enterprise market, where stability and
complete solutions trump all-out performance.
But, said AMD marketing architect Hal
Speed, “What it ultimately came down to
wasn’t just chipsets, but where AMD is
headed and where graphics is headed.” The
easiest thing to do to continue to grow AMD’s
business was to buy ATI outright and get its
chipset unit. With graphics headed for some
form of integration with the CPU, ATI’s exper-
tise in graphics further sweetens the pot. And
that doesn’t even get into ATI’s presence inHDTV and mobile phones — two areas, Speed
points out, where Intel has failed.
Speed said he doesn’t ever see discrete
graphics going away completely, but for
developing nations where a $500 graph-
ics card or even a $100 GPU is out of the
question, a CPU with built-in graphics and
memory might make perfect sense. However,
there are no guarantees.
Intel tried a similar tack in the late 1990s
with its stillborn Timna CPU. Speed, who
worked on Cyrix’s similar MediaGX chip, said
Timna is no way to judge the concept. While
Timna and others reused old technology,
Speed wondered aloud what would happen if
someone tried it with leading-edge CPU, GPU,
and core-logic chipset technology?
Of course, AMD must walk the tightrope
with its new acquisition and avoid offend-
ing either company’s partners: nVidia and
Intel. (nVidia has helped float AMD’s boat
with SLI-compatible chipsets, while ATI’s
Intel-compatible chipsets are a source of
about $100 million in revenue. Speed said
AMD’s friendly track record with its partners
should help it maintain its relationships with
nVidia and Intel, as well as with VIA, SIS,and ULI. Officials at nVidia agreed and said
the company will continue to work with
AMD on its products. Despite the state-
ments, it’s clear the AMD/ATI deal already
has pushed nVidia and Intel closer together.
At the launch event for the new Core 2
CPUs, it was an official from nVidia—not
ATI—who spoke.
“The bottom line is, ATI threw in the
towel,” said nVidia’s Derek Perez. “[the merger]
gives us a unique opportunity to be the inde-
pendent provider of GPUs for everyone.”
Intel officials were mostly mum on the
deal, saying the company was still trying to
work out the ramifications. “It’s too early to
say,” said Chuck Malloy when asked how
Intel would respond.
Malloy said reports that Intel had revoked
ATI’s Pentium/Core 2 bus license were incor-
rect, and the status of it had not changed.
Speed, however, contradicted Intel’s official
response by saying that ATI’s Pentium/Core 2
bus license had already expired. Speed said
that it was a moot point anyway, as a cross-
licensing deal between AMD and Intel would
let ATI make the chipsets without having to
pay any royalties.quick start The beginning of The magazine, where arTicles are small
Bombshell:
AMD and
ATI Elope
AMD rocks the PC land-
scape with its surprise
purchase of graphics ven-
dor ATI. Could this be the
“synergy” that will allow
both companies to topple
their rivals?
It took us by surprise, but apparently AMD has had the hots for ATI. It won’t
be long before we hear the pitter-patter of AMD Radeon videocards.