Advanced Micro Devices (AMD)`s deal with video chipmaker ATI will likely change the landscape in the domestic market, giving a boost to ATI, a runner-up in competition with Nvidia. AMD announced yesterday that it would buy the Canadian firm for 5.4 billion dollars.
The acquisition, which is subject to shareholder and regulatory approvals, would turn AMD into one of the world’s largest providers of graphics chips. "We expect the merger deal to be completed in early next year after approval at a shareholders` meeting and by the two governments," said Park Yong-jin, CEO of AMD Korea.
The merger will likely to bring significant benefits to both companies. It is expected to help AMD compete with Intel in the mainboard chipset market, where the rival company grabs more than 60% of the pie. AMD had been lagging behind in the platform area without its own mainboard chipsets.
AMD expects the deal to help reinforce the relatively weak lineup of notebook products, given that ATI commands more than 70% of the graphic chipset.
The deal is seen as mutually beneficial. ATI aims to close the widening gap with Nvidia in the domestic graphic card market.
"Nvidia has been dominating the market for PC graphic cards adopting Intel and AMD by leveraging a synergy with its mainboard chipsets such as Nforce," said an industry observer. "ATI will dominate the AMD segment of the market in the long term."
The deal is expected to deprive Nvidia of the major customer, as AMD moves to ATI for graphic integrated chipsets. Industry observers say that the business organization of ATI Korea is expected to be merged into that of AMD Korea except for some units involving sales and technologies of multimedia chipsets used for digital TVs and mobile phones.
The multimedia chipset market with such customers as Samsung Electronics and LG Electronics is also seen a major business opportunity for the new AMD-ATI entity.
"We have yet to be formerly informed of the deal," said Cho Young-deok, CEO of ATI Korea. "Chances are we will be maintaining the existing organization by the end of this yea."