San Francisco – Advanced Micro Devices Inc. plans to pay $5.4 billion for top graphics chipmaker ATI Technologies Inc., a bold move that could help the world’s No. 2 maker of PC microprocessors match – or even exceed – the capabilities of larger rival Intel Corp.
The acquisition would instantly turn AMD into a leading supplier of graphics chips, which render images for computer games and Internet video, and so-called chipsets, which connect a PC’s processor to other system components. Intel, which in the past year has lost ground in microprocessors to AMD but is showing renewed vigor, has long supplied both.
Shares of ATI rose 19 percent on the news, while AMD’s stock fell almost 5 percent. The acquisition of ATI “would make AMD a bigger player with a more diversified portfolio,” said Nathan Brookwood, an analyst with research firm Insight 64. It “would certainly put AMD on a more equal footing relative to Intel.”
ATI, based in Markham, Ontario, also supplies semiconductors used in cellphones and high-definition TVs. ATI will also help AMD expand its reach into consumer products, executives said. Intel, which recently sold a division that makes chips for hand-held devices, has been trying to break into those markets for years, with limited success.
Under terms approved unanimously by both companies’ boards of directors, Sunnyvale, Calif.-based AMD will pay $4.2 billion in cash and 57 million shares of its own stock to acquire all of ATI’s outstanding stock, the companies said on a conference call with analysts.
The deal, which is subject to approval by ATI shareholders and U.S. and Canadian regulators, is expected to be completed by year’s end, AMD executives said.
