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AMD Takes Graphics Chipset Plunge With ATI Acquisition: Page 2 of 3

AMD's current area of greatest strength is providing processors that address the server and consumer desktop market, Rivet says. Bringing ATI's graphics technology in-house will allow AMD to better address the commercial desktop and laptop markets, he says, two areas where AMD currently has a smaller presence.

While overall sales of x86 processors currently totals about $30 billion annually, AMD is primarily addressing only a segment that totals about $13 billion, Rivet says. By expanding more into commercial desktop and laptop markets, AMD will be able to grow its overall x86 market share. Rivet says that each percentage of market share gained equates to about $300 million in revenue.

Ruiz says the acquisition "opens up a broad array of options for expanding our capacity infrastructure" by providing AMD with an expanded relationship with some of the largest semiconductor foundries in the world. Currently AMD utilizes internal manufacturing capacity, as well as capacity from Chartered Semiconductor Manufacturing. ATI, however, has manufacturing relationships with two of the other largest foundries in the world, Taiwan Semiconductor Manufacturing and United Microelectronics.

The acquisition of ATI by AMD will now provide computer makers and customers with another choice for integrated microprocessor and graphics processor platforms, says Bruce Shaw, director of worldwide commercial marketing for AMD. Currently only Intel offers an integrated platform.

Although AMD will be providing integrated platforms, it will continue to support the use of third-party graphics products, such as those from Nvidia, in combination with its processors, Shaw says.