Signs point to AMD bid for ATI soon

— 4:22 PM on July 22, 2006

After laying dormant for a while, the rumor mill is churning away faster than ever about the possibility of an AMD bid for ATI. Multiple news outlets, including CNN Money and the Globe and Mail have sources telling them a takeover offer is imminent. The Globe and Mail says AMD's board has approved an offer.

ATI stock is rising today on rumors that AMD will make a friendly offer of between $21 and $23 as early as next week.

The board of directors at Sunnyvale, California-based AMD have approved a takeover offer, according to an investment banker familiar with the talks. Other sources in the financial industry said AMD executives have been spotted at ATI's Markham, Ont. head office.

Some analysts have speculated that such a takeover would make sense in light of AMD's Torrenza initiative, which would allow third-party devices to plug into a socket and participate in an Opteron's (or presumably an Athlon's or Sempron's) memory subsystem. I think that's bunk for many reasons. Torrenza is about opening up AMD-based systems to third-party devices, so calling it the potential motivator behind an acquisition seems really quite strange. Also, Xbox hype aside, I'm not convinced that having a GPU participate in the same memory subsystem with a CPU is a huge win.

Today's fastest graphics cards already have substantially more memory bandwidth than AMD's processors, so the reason to move a GPU into the CPU's cache coherency loop would presumably be to reduce latency. Yet real-time graphics performance is really dependent on bandwidth rather than latency, since memory access latency can be hidden fairly easily. GPUs hide latency by keeping many pixels in flight at once, using custom caching algorithms, and attempting to exploit graphics’ characteristic locality when accessing RAM. A Torrenza-style CPU-GPU mating would address a problem that modern GPU designs have largely solved.

Admittedly, such a beast sounds like a neat theoretical curiosity and a potentially interesting option some years down the road, when a GPU design tailored for such a thing might become available. But I don't think such computer-geeky ideas are the impetus for any rumored marriage between ATI and AMD.

I'm more inclined to think of an AMD-ATI pairing as an unfortunate validation of Intel's "platformization" strategy. I'm also in the camp with this guy from the Globe and Mail story:

One analyst described such a deal as "a breathtakingly bad idea from a strategic perspective."

AMD has "whipped Intel from one end of the school yard to the other" over the last three years and done so without a graphics business of its own. Acquiring a graphics capability would be an expensive distraction and would offer AMD almost no advantage, the analyst said.

I can see the reasons why AMD might feel compelled to snap up ATI at this point in time, but I still don't like it. I'll see if I can write up my reasons for thinking that way soon.
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