Analysts claim AMD-ATI merger is 'likely'

— 2:08 PM on May 31, 2006

In a rather surprising article, Forbes says AMD is eyeing a possible purchase of ATI. This claim originates from RBC Capital Markets analysts who say the move would "benefit the overall graphics industry." To support the claim, one analyst told investors a possible merger would be "consistent with the recent announcements by AMD to significantly increase capacity over the next few-years." Earlier this week, AMD did indeed announce plans to revamp one of its fabs in order to increase production. AMD is also expecting additional production from Chartered Semiconductor starting this summer.

The analyst's statement could be taken to mean that AMD's plans to boost capacity pave the way for a merger, since ATI could potentially end up relying on AMD for production were a merger to take place. However, PC Perspective believes the analyst is simply saying that ATI could help increase AMD's capacity further. If that's the case, then the analyst's rationale is flawed, since ATI relies on third parties for manufacturing.

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