AMD and ATI -- the buy-out of the latter by the former has led to a wide range of speculation but the reason for it is relatively simple.
Unlike Intel, AMD doesn't make chipsets for its processors -- instead it's left that to third parties such as ATI. But, said Tom McCoy, AMD's EVP Legal Affairs: "We decided we needed graphics and control over the chipset ecosystem."
Intel makes a tidy profit on those must-have chipsets, and it's one of the reasons why its OEMs complained about becoming coming commoditised and making single-figure margins on their components while Intel makes 40 percent -- at least that's how McCoy explained it on the announcement day. "But they've become hooked on Intel's marketing money," he said.
So AMD's acquisition of ATI -- now that the dust has settled -- means that it has the chipset side of things under its own control, which will provide it with more resources to add processors around its open architecture, codenamed Torrenza.
This means co-processors can access each other and memory directly via the HyperTransport which cuts latency because access to central memory and processor accesses will be direct and not via another general purpose bus such as Intel's PCI-Express.
Since a modern day graphics processing unit (GPU) such as ATI's is in practice a high performance digital signal processor, there's lots that AMD can do by incorporating the GPU into its family of specialised processors surrounding the main lump of silicon. Even though it's bought ATI, the architecture remains open, using the same AM2 socket as the standard CPU; AMD's Dave Everitt reckoned that over 50 companies have signed up for it.
The other area where the deal makes a huge amount of sense is in notebooks -- an area of huge market growth. Many see notebooks as overtaking desktops in the not too distant future, especially in less saturated markets than the developed world, but here too.
AMD doesn't have a great presence in notebooks while Intel can offer an integrated package around its Centrino branded products as a result of its 'everything invented here' approach. And since notebooks are inherently not upgradeable by users, and integration is key to a solid, robust, high performance design that put Intel in a strong position.
With the ATI move, that changes. It now has the potential to develop a chipset on which to base a mobile platform. And mobile means mobile in its wider sense not just notebooks, important though these are.
According to ATI's MD Peter Edinger: "Notebooks are taking over from desktops - see the future as the platform not individual chips.
"We dominate the market in handhelds, consoles, and other mobiles -- and the future is in automotive, home control, and consoles, not more megahertz. It's about using a different language and being easy to use, about data- and video-centric applications.
"In the next 12-18 months, the future growth of home devices means that an alliance of CPU and GPU is essential."
According to McCoy: "ATI has strength where we need it - it's a pinnacle of excellence, especially in the mobile space where we're not as strong as we'd like to be. We needed a platform for commercial clients and, to get into a mobile platform you need to commit for 12-18 months.
"We also saw that ATI had world class graphics IP, and this allowed possibilities for integrated solutions especially for high growth, low cost platforms in the developing world."
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