It’s been one year since AMD announced that it would acquire ATI and we decided to make an in-depth analysis from both the technical side and the financial side of this operation one year later. We found out some concerning figures. Read on.
AMD buying ATI was probably the most commented news from the past 12 months. Even though there were several other acquisitions, mergers and bankrupcies on the market, none was on the size of this one, officially valuated as a USD 5.4 billion deal.
Even though it was announced on July 24th, 2006, the deal was only concluded at October 25th, 2006, three months later. So it’s not been truly one year since AMD bought ATI; the 1-year anniversary is for the announcement of the deal.
For the PC hardware community AMD buying ATI made sense: it was a CPU manufacturer buying a GPU manufacturer, thus increasing its position on the PC hardware industry. As AMD has plans to release a CPU with an integrated GPU, buying a company specialized in GPUs makes a lot of sense.
In reality ATI wasn’t really a GPU manufacturer, but a GPU designer, since it didn’t have any factory. They designed the chips and sent the project to chip manufacturers like TSMC and UMC for production (the same thing happens with nVidia, for the record). Because of that there is a huge delay between projecting a chip and delivering it to the market. Since AMD has its own factories, they could start manufacturing GPUs, shortening the time between development and delivery. Not only that, having its own factories allow several fine tunings that improve both design and production.
But several questions arouse at the time. Would this merger make AMD a stronger company? Would it increase ATI’s and/or AMD’s market share? And what about their direct competitors, nVidia and Intel? Would they join forces somehow? Would AMD and ATI merger increase or decrease nVidia’s or Intel’s power? These are some of the questions we would like to analyze in this article.
“It makes sense” was – and probably still is – the prevalent feeling of the PC hardware community and industry. However what is the feeling of Mr. Market?
