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AMD Takes Graphics Chipset Plunge With ATI Acquisition

The buy should also expand AMD's manufacturing capability, as well as integrate microprocessors and graphics engines in a single chip. The acquisition is set to be wrapped up by year's

Advanced Micro Devices announced the largest acquisition in its history Monday, paying about $5.4 billion to acquire graphics chip specialist ATI Technologies. The acquisition will let AMD expand its position in the commercial desktop and mobile computing markets, two areas where the company has not had much success.

In addition to accelerating the company's x86 processor market share battle with Intel, the acquisition will expand AMD's access to manufacturing capacity and will lead to products that will integrate both microprocessors and graphics engines in a single chip in future releases.

"Together we intend to create a processing powerhouse," said Hector Ruiz, chairman and chief executive of AMD, during a teleconference to announce the deal. "We are confident the companies will integrate well together. We believe that as technology advances, integration is not only inevitable, but also advantageous."

Beginning next year, the companies will market "customer-centric platforms" using AMD and ATI technologies that will include all existing product offerings. Beginning in 2008, AMD plans to introduce platforms that integrate general purpose processors and graphics engines to meet specific media, data, and graphic requirements, says Dave Orton, president and chief executive of ATI.

Bob Rivet, CFO of AMD, says the acquisition is expected to be completed by year's end. The purchase is a combination of $4.2 billion in cash and 57 million shares of AMD stock.

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