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By | Tony Smith 1st June 2006 09:27

Analyst touts AMD-ATI tie-up

Run up flagpole, see who salutes...

AMD wants to buy ATI, a financial analyst has suggested, though he provides no direct evidence that such a move will take place or when it may happen.

According to RBC Capital Markets analyst Apjit Walia, writing in a note for investment clients, it's all about the synergies between the two firms: ATI is priced right and AMD has the cash. AMD wants to boost its output over the coming years.

"We believe ATI is a rare-buy in the semiconductor space right now given the near-term tie-up dynamics," wrote Walia, according to a Forbes report. "The synergies of this seem consistent with the recent announcements by AMD to significantly increase capacity over the next few-years."

Intel is already a player in the graphics market, courtesy of its chipset business. AMD relies on the likes of ATI, Nvidia and VIA to come up with chipsets to support its processors, though there have been hints dropped in the past few years that AMD might start producing such ancillary chips of its own. Buying ATI would certainly allow it to do so, though at the risk of annoying Nvidia, ATI's arch-rival, and the lead supplier of high-end chipsets for AMD processors.

An ATI deal might also help AMD's efforts to target market beyond the PC arena, by using graphics chip design wins to steer vendors toward AMD microprocessors, but it's a risky play. And it's hard to see the benefit to AMD in owning a stake in the discrete graphics chip market, though maybe it simply wants to get into next-generation games consoles. ®

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