The acquisition of ATI Technologies by Advanced Micro Devices obviously would obviously catalyze roadmap changes for both companies, however, at this point no one can tell how exactly plans of the companies are going to change. An analyst from American Technology Research believes that eventually “the new AMD” would scrap the discrete graphics chips business.

“After analysis of the options, we believe AMD could divest the discrete GPU business and still achieve the company’s longer term goal to integrate a CPU and GPU onto a single silicon chip,” said Doug Freedman of American Technology Research in a note to clients.

The analyst believes that the market share for ATI Radeon discrete graphics processing units (GPUs) will be limited to the market share of AMD’s own microprocessors, thus, will not be really large.

“The discrete GPU business working from within AMD will be at a disadvantage to Nvidia and other independent GPU suppliers. ‘AMD’ GPUs will be very closely tied to AMD platforms and limited in the amount of traction they will be able to gain on Intel-based systems,” Mr. Freedman claims.

At this point discrete GPU business accounts for 50% of ATI Technologies’ quarter revenue of about $650 million, whereas core-logic sets account for about 26% of the company’s quarterly sales. ATI Technologies uses graphics cores and other technologies it develops for discrete GPUs in its chipsets and other products. By ceasing to develop leading edge graphics processors, the company may find itself significantly behind rivals and lose its advantages it may have over market leader Intel Corp. However, Mr. Freedman believes that ATI will be difficult to push its multi-GPU technology into the marketplace, which will reduce the company’s potential for success.

“This will be a marketing issue more so than a technical issue. However, it is unlikely that Intel or Nvidia will support CrossFire in their chipsets, thereby reducing the total available market (for ATI). While the performance/enthusiast PC market has been a small but lucrative niche, recent acquisitions of boutique PC suppliers by Dell (Alienware) and HP (VoodooPC) will bring this technology to a wider audience. Neither these large OEMs nor the smaller boutiques want to be bound to a single GPU supplier,” Mr. Freedman claims.

Currently ATI’s multi-GPU technology is supported by chipsets from ATI as well as Intel Corp. or Via Technologies, meanwhile Nvidia’s SLI is only supported by Nvidia’s own chipsets. Nevertheless, AMD will cease to develop ATI’s chipsets for Intel’s microprocessors eventually, whereas Nvidia will continue to create core-logic sets for both AMD and Intel chips.

ExtremeTech web-site further quotes Mr. Freedman as saying that AMD can sign technology licenses for its GPU technology, creating a revenue stream. Finally, ditching the standalone business would lower AMD’s revenue by “only” $1.4 billion while increasing its gross margins to over 50%.