Anandtech: AMD-ATI Merger in the Works?

[Farid]

http://www.dailytech.com/article.aspx?newsid=2621

Well, we’ve heard rumor after rumor that Dell would eventually consider using AMD processors. Everyone dismissed the rumors and said that the analysts were blowing smoke. Eventually, Dell caved and announced that it would use Opteron processors in some of its server systems. Well, everyone loves a good rumor and this one is a whopper. Forbes is reporting that AMD may be in talks to buy ATI Technologies.

ATI employees have been talking and analysts are buzzing about the possibility of an AMD-ATI merger. "The synergies of this seem consistent with the recent announcements by AMD to significantly increase capacity over the next few-years. We believe ATI is a rare-buy in the semiconductor space right now given the near-term tie-up dynamics," said analyst Apjit Walia.

Note that the title of the news piece was at first "AMD-ATI Merger in the Works?" and then quickly changed to something less sensationalistic "Rumors Swirl Around a Possible AMD-ATI Merger".

 

[Geo]

In related news, TransMeta is considering a bid for NV to ensure themselves a chipset supplier.

 

[digitalwanderer]

Geo doesn't see it.

 

[Farid]

The source (Credits goes to Ratch, via the canadian postal system):

http://www.forbes.com/2006/05/31/amd-ati-technologies-0531markets10.html

AMD-ATI Merger Looks Likely

Advanced Micro Devices may be looking to buy graphics company ATI Technologies, a move that would benefit the overall graphics industry, according to RBC Capital Markets.

"The synergies of this seem consistent with the recent announcements by AMD to significantly increase capacity over the next few-years," wrote analyst Apjit Walia in a note to investors Wednesday. "We believe ATI is a rare-buy in the semiconductor space right now given the near-term tie-up dynamics."

Walia based his prediction on recent checks in the PC food chain. RBC has an "outperform" rating and $23 price target on ATI, and no rating on AMD. The firm expects ATI to report fiscal 2007 earnings per share of $1.06.

It has long been discussed that the graphics-companies are likely to be bought by one of the microprocessor companies, according to Walia. However, for AMD-rival Intel (nasdaq: INTC - news - people ), a partnership with a graphics company may not be the best idea.

 

[Zaphod]

And two weeks ago it was Intel that was buying ATI... Change 'rumors say' to 'we're just now starting a rumor that'...

More facts and less idle speculation from the so called 'on-line press' please.

Edit: Thanks Vysez.

 

[digitalwanderer]

I don't see it either.

 

[Geo]

Hard to blame the usual suspects in the "online press" when Forbes is leading the way tho.

 

[Farid]

To the shareholders of the board

Geo might not be seeing it, but the market does see it, it seems:

ATY is up at 10%
http://finance.yahoo.com/q/bc?s=ATY.TO&t=5d

 

[digitalwanderer]

Geo might not be seeing it, but the market does see it it seems:

ATY is up at 10%
http://finance.yahoo.com/q/bc?s=ATY.TO&t=5d

Check out the one day graph though, bearing in mind that the Forbes article went online at 11:24am...

I think the rumor is fueling the stock move, I don't think it's indicative of any impending trade.

 

[martrox]

This doesn't make a lot of sense to me....... at all.

 

[thatdude90210]

The market didn't react to the Intel rumor, but is reacting to this one.

 

[JoshMST]

Hmm, this almost reminds me of the IBM is buying AMD rumor that we also saw some time ago.

AMD has built its business by participating in intelligent partnerships. Currently it has strong partnerships with both ATI and NVIDIA, and in fact the NVIDIA partnership has been one of the most successful we have seen to date. nForce has been a driving factor for AMD's CPU's, and while it may have flaws, it is still one of the most popular chipsets to date for AMD products.

If AMD were to merge with ATI, NVIDIA would not intially drop out of the AMD chipset market, but it would cozy up closer to Intel. Not to mention that ATI would then probably be allocated Fab space, and advanced process nodes, well before NVIDIA could do so with TSMC (which looks to be about 6 to 9 months behind AMD when it comes to process node changes). I think that such a merger would be bad for the industry.

Now... if AMD were to buy out VIA... that would be different story. They would get chipsets, integrated graphics, and other platform tools that would put it on a level with Intel. Not to mention some of the interesting tech and licenses that VIA currently holds. AMD buying powerhouses such as ATI or NVIDIA would cause sparks to fly in the anti-competitive circles...

 

[Mark]

The only possible reason I can see for this is that AMD is looking at ATI's motherboard chipsets... and even that is pretty far fetched. However, the easiest explaination is usually the right one, so I think this is simply a form of stock manipulation and nothing more.

 

[_xxx_]

Now... if AMD were to buy out VIA... that would be different story. They would get chipsets, integrated graphics, and other platform tools that would put it on a level with Intel. Not to mention some of the interesting tech and licenses that VIA currently holds. AMD buying powerhouses such as ATI or NVIDIA would cause sparks to fly in the anti-competitive circles...

I don't see that as very likely either, but at least better than the initial rumor above.

 

[SugarCoat]

I was told there would be punch and pie in here.... I DONT SEE ANY PUNCH OR PIE!

/leaves

 

[Geo]

The only possible reason I can see for this is that AMD is looking at ATI's motherboard chipsets...

That's what *doesn't* make sense to me --they are getting that today for their platform in spades, and NV as well. And NV was there for them on that front when it really counted.

The only part that would make sense to me is if they wanted to diversify into handsets and hdtv and saw ATI as attractive that way. . . but then what do you do with the rest of the company, which is an 80% majority at last count.

 

[no-X]

Yeah... looking for AMi Athleon X2-800XT

 

[the maddman]

Wouldn't this be a good way of making Nvidia angry, you know, the company that makes the most succesful AMD chipset? I'm not a fan of Nvidia chipsets, but ATI's southbridge problems make them even LESS interesting.

And what about that whole SNAP thing? AMD and Nvidia have been pretty close in the past.

 

[Geo]

Wouldn't this be a good way of making Nvidia angry, you know, the company that makes the most succesful AMD chipset? I'm not a fan of Nvidia chipsets, but ATI's southbridge problems make them even LESS interesting.

And what about that whole SNAP thing? AMD and Nvidia have been pretty close in the past.

What interest does AMD have in making NV angry?

What interest does ATI have in making Intel angry?

 

[digitalwanderer]

I was told there would be punch and pie in here.... I DONT SEE ANY PUNCH OR PIE!

/leaves

/me gives SugarCoat a plate of pie and a glass of punch.