While our sources generally tend to be correct, chances that no acquisition is going to take place, or the companies find different ways to collaborate, or just a part of ATI will go to AMD, while the rest will remain independent, still exist.
Analyst Remain Skeptical
Even though there are a lot of advantages for AMD and ATI to unite, only one technology analyst believes that the deal will happen, while the rest three polled by X-bit labs remain skeptic.
“I remain highly skeptical, and will believe them only if/when I see an announcement from AMD and ATI,” said Nathan Brookwood of Insight 64.
“It could very well happen though as there several factors in favor of the deal. I think it is likely that AMD will pursue the ATI acquisition. If it fails to materialize the most likely reason would be that the goodwill demanded by ATI was too rich for AMD,” said Martin Kariithi, an analyst with Technology Business Research.
“I'm quite skeptical until the companies themselves say otherwise,” said Dean McCarron of Mercury Research.
“It really doesn’t make sense for AMD to acquire ATI, I just don’t get it,” said Jon Peddie of Jon Peddie Research.
A Strategic Merge?
Obviously, if the acquisition takes place, it will be more of a strategic merge, rather than a pure takeover, as AMD does not have enough resources to proceed with hostile takeover or pay for ATI significantly more than its market capitalization is. Therefore, the deal should have great strategic sense for both companies.
If the takeover happens, AMD will become a provider of a broad portfolio of solutions overnight, but it will be tough to organize the new company for the management. ATI’s and AMD’s corporate cultures are completely different, moreover, ATI is focused around rapid development of graphics processors, chipsets and technologies, whereas AMD is concentrated on creation of successful x86 micro-architectures and successful fabrication of them at its foundries.
Let us make no final conclusions, but just try to summarize, what the potential deal means for both companies.
Advantages for ATI:
- Gain access to advanced manufacturing facilities, which are constantly ahead of TSMC with process technologies;
- Save on chip prototyping;
- Ability to sell graphics cores among AMD’s multi-chip-module design processors;
- Ability to share engineers with AMD;
Disadvantages for ATI:
- Being a part of the company known for selling out business units, which have no immediate benefits;
- Tied to particular manufacturing facilities;
- AMD may reassign some engineers or teams to work on the CPUs;
- Roadmap adjustments for projects, which are scheduled for 2008+;
- ATI’s team may get dissolved in AMD, which will be reflected by material results;
- Intel’s chipset business and collaboration will be ceased;
Advantages for AMD:
- New markets;
- New engineering talent;
- Ability to sell chipsets and platforms;
- Ability to address gaming consoles;
- Ability to load fabs to the maximum level;
- Increase the influence on the PC industry;
- Bump GPUs onto processors;
Disadvantages for AMD:
- Competition with Intel on more than one market had not been successful for AMD before;
- Increased complexity and execution of the company;
- Necessity to re-build AMD and ATI amid Intel’s heavy attacks on the CPU market;
Impact on Nvidia:
- Both rivals (Intel and AMD) will have own fabs;
- Both rivals will have huge product portfolios and many businesses, which may mean that they will be less aggressive on the graphics field, which is good for Nvidia, as it will be the only big GPU-dedicate company;
- AMD-Nvidia long-term collaboration will be halted;
- Nvidia will have to concentrate on Intel chipsets, which is generally larger, but perhaps, less profitable compared to AMD chipset market;
- Among the current participants of CPU and GPU duopolies, Nvidia will be the only unable to ship top-to-bottom platform solutions;
- Nvidia is likely to enjoy very high profit margins in the segment of professional graphics, if its hardware is enough fast;
The changes AMD-ATI merger can mean for the whole industry can be even more dramatic. Our readers are welcome to share the thoughts on the matter in the comments, or in the forum.