XGI Technology, a troubled graphics chip designer from Taiwan, said late Thursday that is plans to refocus its graphics processor development efforts to markets that do not require state-of-the-art performance and capabilities, but low power consumption. The firm declined to reveal any information about possible acquisition by ATI Technologies.

“XGI has decided to move the main focus of the company into embedded and server market. The detail of this will be announced once everything gets clear,” said CP Lin, a spokesman for XGI.

XGI Technology is a spin-off from Silicon Integrated Systems Corp. that acquired graphics division of Trident Microsystems in 2003. The company has intended to challenge ATI Technologies and Nvidia Corp. in all market segments, but the high-end product called XGI Volari Duo V8 Ultra did not demonstrate decent performance, whereas lower-end and mainstream chips were not successful on the market. Still, XGI has some design wins with server makers thanks to its low-power graphics chip.

Earlier a Chinese-language web-site reported that ATI would announce acquisition of XGI. The web-site claims that the acquisition is to be announced Friday, the 3rd of March. Some other unofficial reports also claim about the intention of ATI to take over XGI.

Commenting on the acquisition rumours, Mr. Lin said that “so far I have not yet heard such kind of information”.

Some industry sources believe there are a number of world-class specialists in XGI from overseas, but what is pretty clear, the number of such engineers is not enough to form a large design team for PC graphics chips. But for ATI or Nvidia it may make sense to acquire those specialists to broaden the presence on the strategically important Asian market.