Sinatech: ATI/AMD Aquisition Agreement Reached: ATI facing a big shake-up

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Razor1 said:
True profit margins are much higher on the CPU end per chip. Also there is less overhead for other parts (ram, circuit board, etc, etc), the CPU market is much more profitable and lucrative
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Could you elaborate? What are true profit margins? (are there deceiving ones?)

Edit: Anand's opinion seems in line with mine.

Sir Scoops-a-lot himself, Fuad Abazovic at The Inquirer, posted a news story saying that on Monday AMD and ATI will propose a merger to their shareholders. We've heard the AMD/ATI rumors for quite a while now and if I knew for sure if it was going to happen I'd leave some veiled hint in an article that it would, but honestly I'm not sure. The idea of it happening, however, is quite intriguing and in my opinion, would be tremendous for AMD.

As soon as you bring up the idea of a merger, everyone immediately asks "why not NVIDIA?" The problem with NVIDIA is that they are far too Intel-like of a company (see: my dinner table discussion from my Core 2 review).

The other important thing to consider is that if AMD and ATI merged, a very important market for NVIDIA chipsets would cease to exist forcing NVIDIA to turn to Intel for scraps off the table, which the link above explains would not be a healthy lifestyle choice for NVIDIA.

Strategically it makes sense, if GPUs are becoming more CPU-like with each generation then there may come a time where either a CPU company drives a GPU company out of business, or vice versa. By combining talents early, you create a company that would be very well prepared for the convergence of the CPU/GPU.

Don't look at the idea of a merger as AMD having a closer chipset partner, but imagine what else could come from it.

Imagine a Socket-AM2 GPU, with incredibly low latency access to a Socket-AM2 CPU. A huge strength of just about any gaming console (see: PS3) is the extremely high bandwidth, low latency interconnect that exists between the CPU and GPU.

Imagine a stripped down graphics core stuck on a Athlon 64 processor die, all of the sudden integrated graphics wouldn't be so terrible. Taking this "what-if" even further, it may just make Intel produce better integrated graphics solutions. And that would make my good friend Mark Rein quite happy ;)

But more importantly, imagine a GPU company that was no longer fabless. If ATI were able to gain a manufacturing advantage over NVIDIA you'd be able to see more transistors, clocked higher and running cooler in ATI GPUs than NVIDIA at any given product cycle.

Simply merging the two companies wouldn't announce the death of NVIDIA or anything like that, because both would have to work extremely hard to actually overcome their weaknesses and make some of these fantasies happen. But if they could, well, that would reason enough to merge.

Update from the Lab: Derek is hard at work on a Prey GPU performance comparison, Josh Venning has just started on our long overdue silent GPU roundup, and I've been testing Intel's Core 2 Duo E6400 & E6300 non-stop. Between benchmark setups I've also been working on the HD-DVD/Blu-ray piece and preparing for my X2 EE/EE SFF article. Tomorrow I'll officially start some of the performance per watt testing for the X2 EE/EE SFF piece - thanks for your feedback on what you'd like to see in that article, it's helped tremendously.
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incurable said:
Torrenza's set out to solve a problem (CPU <-> Co-processor latency) GPUs don't have.
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Which co-processor could you possibly think of, that'll take advantage of HyperTransport? Sound card? Network card? I'm not sure what kind of problems need to be solved with those, either. I once made a joke that I/O system (i.e. mouse and keyboard) might be a good candidate to utilize such a fast interconnect. :D One might say "physics processors!" but, hey, let's get realistic. In current and near future market (say, up to 5 years only because we don't know what'll catch on after that), the only thing that'd take advantage of such connection is graphics.
 
Ok this probably won't add much to the conversation as I'm no expert and it's 3am (yay sugar!!!)

I wonder if this could help the opteron? Looking into the future, servers and DBs are the first place massivly multithreaded apps will really start to grow, so maybe with Atis experience with their thread dispatch processor (or whatever they call it :)) and it's ability to hide latency over 100s of concurrent execution streams could help AMD out? You can only go so far with massive powerful cores before you need to start thinking smaller and smarter. Sun niagra anyone?
All DBs generally do is bucket loads of integer causing ye old flow control, mixed in with bucket loads of bad latency, fairly random memory access. Sure it's not the same but R600 would probably cope fairly well in such a situation.

Ohh and I want to see an athlon X2800 XTX PE.
 
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Skrying said:
I dont think AMD played a game of going big. I think they wanted the biggest cheap guy they could get.... enter ATi. Nvidia would be far to expensive for AMD right now, hell I think ATi is far to expensive for AMD right now.

I think AMD as a whole would be much better off purchasing a smaller company out there then buying something as large as ATi.
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Alternatively, they could have bought PoverVR (or bitboys) and Hauppuage and got into pretty much all the same markets that ATI covers.
 
And why would they put GPU in co-processor slot? Amybe they can create custom co-processor...
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Going the way of graphics processing -> PS3/360's CPU and GPU are interlinked without a intermediary chipset (iirc).
 
A176 said:
Going the way of graphics processing -> PS3/360's CPU and GPU are interlinked without a intermediary chipset (iirc).
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Yet they still had to have SiS designing a Southbridge for the X360.
 
AMD cant buy ATI they dont have the cash. It would have to be a mutual merger (i'd love to see the details of who controls what). And as far as i know ATI has a base of operations in California already and can be considered American in my mind since both the Canadian HQ and base in California do R&D on graphics chips.


.....plus...its canada dude....everyone knows its part of America already. :smile:
 
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http://messages.yahoo.com/bbs?.mm=G...4027&tid=amdinvestors&sid=1600774027&mid=2790

This was supposedlyin the Wall Street Journal today:

AMD Will Pay $5.4 Billion
To Purchase ATI Technologies

By DON CLARK and DENNIS BERMAN
July 23, 2006 4:16 p.m.

SAN FRANCISCO -- Advanced Micro Devices Inc. plans to pay about $5.4 billion to buy ATI Technologies Inc., people familiar with the matter said, in what would be one of the biggest-ever acquisitions of a semiconductor maker.

The companies were in late stages of negotiations Sunday, with a deal likely to be announced as early as Monday morning, these people said. ATI had a market capitalization of about $4.2 billion as of Friday. The consideration from AMD is expected to be mostly in cash, with the remainder comprised of AMD shares, these people said.

The long-rumored deal, if completed, could transform AMD's long-running battle with Intel Corp., the No. 1 supplier of the microprocessors that serve as electronic brains in personal computers. ATI, based in Markham, Ontario, is best known for another category of chips that handle PC graphics, a market where it competes fiercely with Nvidia Corp.

Significantly, ATI also makes another category of accessory products called chip sets, which carry out functions such as fetching data from memory and sometimes come with built-in graphics. Intel has an even bigger business in chip sets, and has used that capability effectively against AMD.

Intel's strategy has been particularly potent in laptop computers, where the company has used the combination of microprocessors and chip sets to offer such benefits as lower power consumption. AMD, with ATI's help, could match and possibly surpass Intel's ability to offer computer makers such integrated "platforms" of technology, said Jon Peddie, a market researcher in Tiburon, Calif.

Rahul Sood, president of the gaming computer company VoodooPC, argued in a blog over the weekend that ATI is a "diamond hidden deep in the rough." The proposed deal would be a brilliant stroke for AMD, he argued, representing "a go-big strategy that will shake the very foundation of our industry."

The transaction is considered controversial, however. That's partly because AMD has generally enjoyed benefits from being a neutral partner for both ATI and Nvidia, particularly in the market for high-performance PCs favored by game enthusiasts.

AMD needs Nvidia's continued support in selling chip sets and graphics chip that exploit AMD's microprocessors, and so would have to be even-handed in sharing information with Nvidia as well as an ATI subsidiary.

Another possible concern is ATI's track record. The company last year ran into delays in launching its latest high-performance graphics chip, allowing Nvidia to boost its market share. In late June, ATI issued a sales forecast that fell short of analysts' expectations, triggering a sharp drop in its stock price.

AMD also has been separately spending heavily on boosting its manufacturing capacity. The company, which had about $2.5 billion in cash and short-term investments at the end of June, would likely have to take on debt to finance the ATI transaction, further stretching its financial resources at a time when its share price has been under pressure because of competition from Intel.

AMD, of Sunnyvale, Calif., on Thursday reported a 53% jump in second-quarter revenue, but acknowledged that sales would have been even higher if pricing pressure from Intel had not been so severe. In response, the company's stock sunk 15.6% Friday to trade at 4 p.m at $18.26, off $3.39, on the New York Stock Exchange.

Several news outlets carried reports of a potential deal between AMD and ATI Friday, including the Inquirer -- a Web trade publication -- the Toronto Globe and Mail and Bloomberg. ATI shares rose 83 cents, or 5.3%, to $16.56 at 4 p.m. on Nasdaq.
 
lopri said:
Could you elaborate? What are true profit margins? (are there deceiving ones?)

Edit: Anand's opinion seems in line with mine.
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net profit margins sorry wrong word, net profits are quite a bit higher for CPU's, intial costs are a bit higher depending on how you look at it. R&D costs are probably more because of the speciallized libraries, manufacturing costs per chip should be less. Also chips that don't cut the top end can easily be down graded to slower CPU's (alot more sku's per chip then for GPU's). Also over all R&D costs are spread over many years not just 1 or 2 years for GPU's.

The anandtech analysis is good but only in a very long term look at things. What they are saying about GPU or CPU running both is a great idea but IMO it won't happen for at least 10 years. 10 years is a lot of time where things will change drastically. In the mean time, AMD's goal is still outgun Intel in any way possible, and right now its a very weak starting point to be looking 10 years down the road and forget about tomorrow. AMD's focus with aquiring ATi is chipsets and other emerging markets, intel already has its foot in some handhelds (PDA's).

nV won't loose AMD at all, top end gamers and enthusiets still get nforce chipsets over Intel chips sets. This is still the nitch where nV will focus on. AMD will be going for a overall chipset for lower to mid range sales and over course high end too, but thier main focus would be to the masses first.
 
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I wonder how much, if any, the fact that Intel was clearly ramping up to be relying a whole lot less on ATI for chipsets had to do with this deal? From ATI's side, that is. They've seen it coming for some time.
 
But Intel was only relying upon ATI because Intel had a blip - they sorta cut off their left hand by discontinuing stuff, as I understand it. ATI's merely had a 9-month window (or however long it's been).

Jawed
 
Jawed said:
But Intel was only relying upon ATI because Intel had a blip - they sorta cut off their left hand by discontinuing stuff, as I understand it. ATI's merely had a 9-month window (or however long it's been).

Jawed
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Full (and official) Crossfire support on i975X is not exactly a "blip"...
No such thing on 965 now.
 
Jawed said:
But Intel was only relying upon ATI because Intel had a blip - they sorta cut off their left hand by discontinuing stuff, as I understand it. ATI's merely had a 9-month window (or however long it's been).

Jawed
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Oh, I understand. But they also ramped capacity to meet it. Might have got to like that.
 
INKster said:
Full (and official) Crossfire support on i975X is not exactly a "blip"...
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That's not what Geo's referring to, though. ATI has been providing chipsets for Intel (which Intel relabels) for use on Intel manufactured mobos.

Additionally, SLI isn't supported on Intel's chipsets because NVidia is being "greedy" (selfish, whatever you want to call it). Whereas ATI is saying to Intel, here's how to get CrossFire working...

Jawed
 
Jawed said:
That's not what Geo's referring to, though. ATI has been providing chipsets for Intel (which Intel relabels) for use on Intel manufactured mobos.

Additionally, SLI isn't supported on Intel's chipsets because NVidia is being "greedy" (selfish, whatever you want to call it). Whereas ATI is saying to Intel, here's how to get CrossFire working...

Jawed
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Yes, i'm aware that they sold chipsets to Intel, but Intel has also been bundling Geforce 6200 TC's with a few own-brand motherboards at the same time:
http://www.matbe.com/actualites/13236/intel-vend-des-geforce/

They had the option to continue selling ATI on the same deal, and yet...



But, in being greedy, is it more profitable for NV to license a technology to a 3rd party's chipset, or to actually sell chipsets of your own, keeping full profits for yourself ?
Also, aren't ATI's management/shareholders being greedy when they ask 5.4B to sell a company worth 4.2B ?


Businesses are made to be greedy/profitable, not emotional.
 
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