Opinion: AMD's ATI buy throws cold water on Conroe

Rumours have been flying since Computex that AMD was going to buy ATI, and the industry slowly convinced itself that it made sense and then it happened, and everyone lost the plot.

It was the cold water AMD needed to throw over the Conroe party, and as a result, here they are in their own little column.

ATI was bought for US$5.4 billion dollars in cash and shares, and AMD needed to take out a US$2.5 billion dollar loan to do it. Keep this in mind next time you need a new car.

The deal is still subject to ATI’s shareholders agreeing (which is likely to be just a matter of process), but more importantly, has to be passed by the American government. We daresay the Canadian government will have a few things to say as well.

Should all go peachy, the ATI name will disappear forever and both product sets will be marketed under the AMD name. Should things go pear shaped and the companies end up staying separate, ATI will pay AMD a cool US$162 million for their trouble.

The acquisition allows AMD to play against Intel on a level playing field – giving them access to both chipsets and integrated graphics across both the PC and consumer electronics spaces. Not surprisingly, some of ATI’s licenses with Intel have not been renewed.

ATI also stands to benefit from AMD’s own manufacturing fabs, which should hopefully mean cheaper production costs – however at this stage this is merely speculation, and will be some time before it will happen, if indeed it ever does.

More exciting though is the potential architectural changes that may hit the PC over the next two to five years as a result of the merger – with direct control over such powerful graphics resources, AMD has the potential to reshape the entire landscape as a result – or divide it, if they don’t watch their step.

No one really seems worried about Intel, it’s assumed that big blue can look after itself quite well already. Who else could pull off the comeback that is Conroe, and force AMD into such an incredulous position in the first place? Nonetheless we’re sure we can hear the whips in the research department cracking that little bit harder.

The bigger concern is NVIDIA, who arguably gave AMD their leg up into the industry thanks to their dominating nForce platforms, and it probably isn’t very happy right now. NVIDIA doesn’t necessarily play well with Intel, but depending on how good AMD’s diplomats are, it may be forced into playing a little nicer with its Santa Clara partner. One thing is certain – there’s now a whole new rule set being written that the graphics world will need to adhere to.

It’s unlikely any one will play hard and fast – we may see a few preliminary moves, but until the merged monolith that is AMD and ATI play their first hand, expect most people to tread lightly and carefully, and even then, don’t expect big changes for a number of years.

In the short term, we expect ATI will at least help AMD to flesh out their anorexic - Live! offerings in the face of Intel’s VIIV. In the long term, who knows where the GPU itself will head?

We await the answers, and AMD’s next attempt at the CPU performance crown.

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